Potential 20% Decline in Bitcoin Price: Insights from Bitfinex Analysts
Analysts from Bitfinex have raised concerns regarding the potential decline in Bitcoin’s price, warning that it could experience a drop of as much as 20% due to uncertainties surrounding the Federal Reserve’s imminent interest rate decision. They contend that the outlook for Bitcoin (BTC) is significantly tied to the Federal Reserve’s actions in the coming months.
In a report published on September 2, Bitfinex analysts attribute Bitcoin’s recent impressive 32% surge to expectations of a more accommodative stance from the Federal Reserve. However, they caution that any forthcoming rate adjustments will greatly impact Bitcoin’s volatility in the short term and its price trajectory in the long run. A likely rate cut of 25 basis points could initiate a conventional easing cycle, fostering greater liquidity in the market, potentially providing upward momentum for Bitcoin as recessionary fears begin to diminish.
Conversely, the analysts indicated that a more drastic cut of 50 basis points could trigger an immediate price surge; however, it might be followed by a significant correction as recession fears heighten. Recent trends in the market suggest that spot holders are beginning to de-risk their positions while perpetual market speculators are keenly attempting to “buy the dip,” as evidenced by a notable increase in long positions within Bitcoin perpetuals.
The analysts predict that, following the anticipated rate cut, Bitcoin may experience a decline ranging from 15% to 20%, possibly hitting a bottom within the $40,000 to $50,000 range. This projection is informed by historical patterns indicating that peaks in percentage returns for Bitcoin commonly decline by 60% to 70% in subsequent cycles, as well as a reduction in the average corrections during bullish market phases. Nevertheless, it is critical to note that shifts in macroeconomic conditions could swiftly alter this forecast.
Historically speaking, September has proven to be a volatile month for Bitcoin, with average returns hovering around -4.78% and a peak-to-trough decline often reaching as high as 24.6%. The analysts emphasize that this characteristic volatility, compounded by the risk of a “sell-the-news” reaction following the rate cut, can present both risks and opportunities for traders.
The Federal Reserve’s next meeting is scheduled for September 17 and 18, wherein it is widely anticipated that an interest rate cut will be announced. However, the extent of this change remains uncertain, given the current stability evidenced in the U.S. economy, characterized by solid consumer spending and signs of steady disinflation.
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