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Bitfinex has raised concerns about the impact of an anticipated U.S. Federal Reserve interest rate cut on Bitcoin’s price, suggesting it could lead to a drop rather than the hoped-for boost. The Fed's decision, expected on September 18, follows dovish comments from Fed Chair Jerome Powell, who indicated that “the time has come” for a rate cut.
In a note released on September 2, Bitfinex mentioned that {Bitcoin} (BTC) might experience a decline of 15-20% if the Fed cuts rates, potentially pushing its price down to levels not seen since February. As of the latest data, Bitcoin is trading at $57,754, reflecting a 2.67% decrease over the past week. A 20% drop from this price would place Bitcoin around $46,000, a level last observed on February 8.
The note highlighted that September is traditionally a volatile month for Bitcoin, and the expected rate cut could add to this volatility. Historically, investors turn to assets like Bitcoin when interest rates fall, as traditional investments such as bonds and term deposits become less attractive.
Despite the Fed's expected move, market sentiment remains hopeful that the rate cut will support Bitcoin’s price. However, Bitfinex cautions that current market conditions could lead to unpredictable movements.
Research from 10x Research notes that Bitcoin might need to drop into the low $40,000s before the next bull market begins. Additionally, Bitcoin Layer’s Joe Consorti suggests that $60,000 is evolving from a speculative peak to a consolidation zone, where long-term holders are accumulating.
