Bitcoin (BTC) price may be faced with more downside pressure ahead of the United States Federal Reserve’s Sept. 18 interest rate decision after losing the key $60,000 support.
The incoming decision could introduce more price volatility for the world’s first cryptocurrency, depending on which way it goes, according to Bitfinex analysts, who told Cointelegraph:
“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 might be reflected in flows across ETFs and perpetual markets, which are likely to exhibit increased fluctuations.”
The prediction comes a day before the Fed is widely expected to deliver its first interest rate cut since the beginning of the COVID-19 pandemic.
More analysts are increasingly calling for a Bitcoin breakout in October, which could be catalyzed by the Fed’s interest rate cut.
Related: Bitcoin price struggles as bears overtake bulls in futures markets
$52,000 Bitcoin was the price bottom — Bitfinex analysts
Bitcoin recovered above the $60,000 psychological mark on Sept. 14 for the first time since Aug. 30, but it lost the key support level on the same day.
However, Bitcoin’s recent price action suggests that the token bottomed at around $52,000, explained Bitfinex’s analysts:
“Our earlier view that Bitcoin's dip to $52,756 on Sept. 6 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.”
BTC/USD, 1-day chart. Source: Bitfinex
Bitfinex analysts have previously called for a Bitcoin correction into the low $50,000, which could represent a “critical point” for the market ahead of the next interest rate cut.
Related: Ethereum falls to new 42-month low vs. Bitcoin — Bottom or more pain ahead?
Markets expect a 50-basis-point rate cut, but analysts disagree
According to the latest data from the CME FedWatch tool, the odds of a 25 basis-point rate cut currently stand at 33%, while the odds of a 50 basis-point rate cut are at 67%.
Odds of an interest rate cut. Source: CME FedWatch
Despite increasing bets on a larger rate cut, the Bitfinex analysts see a 25-basis-point rate cut as more likely. They added:
“There is slightly stronger core inflation, which we believe will make the Fed more cautious about rate cuts, and we expect a smaller 25-basis-point cut, rather than a more aggressive 50 basis point reduction.”
The interest rate cut, combined with previous historical chart patterns, could set Bitcoin up for a three-month rally above $92,000, considering that October, November and December are historically bullish months for BTC.
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