Bitcoin Price Action Uncertain Following Federal Reserve Rate Decision

Cryptonews Economy John Brightwater September 17, 2024

Bitcoin Price Action Uncertain Following Federal Reserve Rate Decision

Summary
Bitcoin’s price is currently uncertain, with predictions suggesting potential moves between $53,000 and $65,000 following the Federal Reserve’s anticipated rate decision on September 18. Jonathan de Wet from Zerocap highlights a 62% chance of a 50 basis point cut, which impacted Bitcoin’s brief rally. Despite positive sentiment, uncertainties from the upcoming U.S. election pose risks for market direction.

Bitcoin’s price trajectory appears uncertain following the Federal Reserve’s impending rate decision on September 18, with predictions indicating a potential dip to $53,000 or a rise to $65,000, according to insights from the Australian crypto trading company, Zerocap. Jonathan de Wet, the Chief Investment Officer at Zerocap, conveyed in an interview with Cointelegraph that the market currently anticipates a 62% likelihood of the Fed instituting a rate cut of at least 50 basis points (0.5%). This speculation has already fueled a temporary rally that propelled Bitcoin to over $60,000 on September 13. De Wet characterized the price movement as “tough to call” due to the prevailing uncertainty surrounding the short-term ramifications of potential rate cuts, which is further complicated by the upcoming U.S. election in November. He noted that the downside target for Bitcoin is $53,000, following recent lows, while an upside could reach $65,000 if the asset surmounts a descending wedge formation. Furthermore, de Wet emphasized that firms should approach directional trading cautiously until election uncertainties are clarified, yet he revealed optimism regarding short-term positive sentiment due to favorable risk conditions. Currently, Bitcoin is priced at $58,000 after a brief ascent to approximately $60,000 on September 13, primarily driven by strong CPI and PPI inflation data. Zerocap adopts the position of expecting a 50 basis point cut, contrasting with a more conservative estimate of 25 basis points. De Wet indicated that the Fed’s rate decision projections increasingly resemble an onset of a rate-cutting cycle, which could bolster risk assets as the year concludes. Recent data from the CME Group’s FedWatch Tool indicates a 62% chance of a 50 basis point reduction in rates on September 18. Market participants have been fervently debating the implications of these forthcoming rate adjustments, with analysts divided on whether they will serve as bullish or bearish signals for risk assets, including cryptocurrencies. Historically, rate cuts have been associated with bullish conditions in risk sectors, as they enable investors to borrow at a lower cost and pursue higher-risk investments due to reduced interest on cash and treasuries. Conversely, some analysts caution against this view, referencing market trends from 2001 and 2007, where rate cuts preceded recessions amidst deteriorating macroeconomic conditions. De Wet articulated that the uncertainty surrounding the U.S. election is affecting the cryptocurrency market, with investors cautious regarding the effects of a potential win by Vice President Harris on the crypto landscape. “Harris leads in the polls and had a convincing win over Trump in the recent debate. If these odds begin to shift back towards the Republicans, watch out for the long banks, energy, and bitcoin trade with a Trump win,” he commented.

The backdrop of this discussion encompasses the Federal Reserve’s upcoming decision regarding interest rates, which has significant implications for financial markets, including cryptocurrencies like Bitcoin. Investors are keenly attuned to the effects that changes in interest rates may have on market dynamics, particularly as they relate to borrowing costs and overall economic sentiment. Historical precedents show that rate cuts can have mixed repercussions, emphasizing the need for a comprehensive understanding of the current economic context as well as the political landscape before the forthcoming U.S. election.

In conclusion, the price of Bitcoin is at a crossroads in anticipation of the Federal Reserve’s decision on interest rates, with potential outcomes ranging from $53,000 to $65,000. While there is optimism stemming from expected rate cuts, the uncertainty of geopolitical events, particularly the upcoming U.S. election, complicates the investment landscape. Investors must navigate this dynamic environment with caution, acknowledging both the risks and opportunities inherent in this volatile sector.

Original Source: cointelegraph.com