Anticipated Volatility in Bitcoin Ahead of US Interest Rate Decision

Cryptonews John Brightwater September 17, 2024

Anticipated Volatility in Bitcoin Ahead of US Interest Rate Decision

Summary
Bitcoin is facing potential volatility as it drops below $60,000 ahead of the US interest rate decision. Analysts predict that the rate cut may influence market behavior significantly, with a possible local bottom at $52,000. Speculative sentiments suggest a break upwards for Bitcoin in October, albeit with differing opinions on the magnitude of the expected rate cut.

Bitcoin is currently facing increasing downside pressure as it has dropped below the crucial support level of $60,000, creating a precarious environment leading up to the anticipated US interest rate decision. Analysts from Bitfinex have informed Cointelegraph that the forthcoming decision could result in heightened volatility for Bitcoin, contingent upon the specifics of the rate adjustment. The analysts articulated that “Depending on whether the rate cut is 25 basis points or 50 basis points, market behavior could swing between bullish optimism and cautious de-risking in response to major macroeconomic adjustments.” This expected volatility may be observed through fluctuations in Exchange-Traded Funds (ETFs) and perpetual markets. The market is brimming with speculation regarding the Federal Reserve’s decision, with many anticipating the first rate cut since the onset of the COVID-19 pandemic. The price of Bitcoin rebounded past the psychological threshold of $60,000 on September 14, only to lose this critical support on the same day. Despite this, Bitfinex analysts maintain that Bitcoin’s price dipped to around $52,000, indicative of a potential local bottom. They noted, “Our earlier view that Bitcoin’s dip to $52,756 on 6 September might represent a potential local bottom has been substantiated. Prices have subsequently increased by over 15 percent, supported by a significant uptick in Bitcoin ETF net inflows of $403.9 million over the past week.” Additionally, while many analysts project a breakout for Bitcoin in October, potentially ignited by the Fed’s decision, there remains a divergence of opinion regarding the extent of the anticipated rate cut. Recent data from the CME FedWatch tool suggests a 67% likelihood of a 50 basis-point cut compared to a 33% probability for a 25 basis-point cut. However, analysts at Bitfinex opine that a more cautious approach from the Fed would suggest a smaller cut of 25 basis points.

The current state of Bitcoin is notably impacted by impending economic decisions, particularly the Federal Reserve’s interest rate cut, which is of paramount importance in shaping market sentiments. The cryptocurrency has experienced significant fluctuations in recent times, with analysts keenly observing price support levels and recovery patterns. Rate decisions by the Fed can have pronounced effects on investor behavior, leading to volatility within digital asset markets.

In summary, Bitcoin’s potential volatility is predominantly influenced by the upcoming US interest rate decision. Analysts suggest that the pricing action is sensitive to whether the Fed opts for a modest 25 basis-point cut or a more substantial 50 basis-point adjustment. Historical data indicates October, November, and December are favorable months for Bitcoin, raising expectations of a market rally if the correct economic conditions materialize. Furthermore, analysts continue to monitor key price levels to ascertain market trends.

Original Source: cointelegraph.com