Bitcoin Could Fall to $45,000 After Rate Cuts – Bitfinex

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Bitcoin (BTC) may reach the mid-$40,000 range in September following US interest rate cuts, Bitfinex analysts reported.

In the last aggressive rate cut cycle of 2019, BTC fell by 50% after the Fed decided to cut interest rates. However, analysts pointed out that the actual conditions differ, as Bitcoin has undergone two halving events and the world economy is not facing a global pandemic.

“If we apply similar logic today, however, a 15-20% drop in the price of Bitcoin could be anticipated at the time of the rate cut,” they added.

Assuming BTC price around $60,000 before interest rates are cut, this would place a potential low between the low $50,000 and $40,000 levels.

In particular, Bitfinex analysts emphasized that this is not an arbitrary number, as it is speculating on the evolution of macroeconomic conditions.

Potential outcomes

Analysts predict that a rate cut of 25 basis points could initiate a gradual uptrend in Bitcoin after an initial selling event on the news. This scenario signals the Fed’s confidence in economic resilience and could lead to longer-term price appreciation as recession fears subside.

On the other hand, a more aggressive cut of 50 basis points could trigger an immediate increase of up to 8% in Bitcoin price due to increased liquidity expectations.

However, this uptick could be short-lived, potentially followed by a correction reflecting past instances where aggressive rate cuts initially boosted asset prices before economic uncertainties dampened gains.

Furthermore, historical data shows that September has an average return of -4.78% for Bitcoin since 2013, with a typical peak-to-trough drop of 24.6% since 2014. This volatility is often attributed to trading activity driven by people as fund managers return. from the summer holidays.

While the potential rate cut adds complexity to market forecasts, analysts note that when August ends in the red, September has occasionally offered positive returns, challenging the assumption of a bear month.

Despite the short-term caution, especially given the historical volatility since September, Bitfinex analysts maintain a bullish long-term outlook for Bitcoin. The upcoming Federal Open Market Committee (FOMC) meeting and potential rate cuts are expected to be pivotal events for Bitcoin and the broader crypto market.

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