Bitcoin is set for volatility ahead of US interest rate decision: Analysts
Bitcoin price threatens further downside pressure ahead of tomorrow's interest rate decision after missing the $60,000 key.
Bitcoin (BTC) volatility may herald further price action ahead of the Federal Reserve's (Fed) next interest rate decision on September 18.
A decision on interest rates could introduce more price volatility to the world's first cryptocurrency based on monetary decisions, Bitfinex analysts told Cointelegraph.
“Depending on whether the rate cut is 25 basis points or 50 basis points, market behavior could oscillate between optimism and cautious risk in response to major macroeconomic adjustments. This expected volatility may be reflected in flows in ETFs and perpetual markets, which may exhibit higher volatility.
The forecast comes a day before the Fed is widely expected to raise interest rates for the first time since the start of the Covid-19 pandemic.
More analysts are looking for a Bitcoin breakout in October, which could be triggered by the Fed's interest rate cut.
Related: Bitcoin price struggles as bears overtake bulls in futures markets
$52,000 Bitcoin price was down: Bitfinex analysts
For the first time since August 30, on September 14, Bitcoin returned above the psychological mark of $ 60,000, but on the same day a key support level was lost.
However, Bitfinex analysts explained that Bitcoin's recent price action indicates that the token is down around $52,000.
“Bitcoin's low to $52,756 on September 6th may represent a local low, confirming the previous view. Prices subsequently rose more than 15 percent, largely supported by Bitcoin ETF net inflows of $403.9 million in the past week.
BTC/USD, 1-day chart. Source: Bitfinex
Bitfinex analysts have previously called for a Bitcoin correction to the lows of $50,000, which could mark a “tipping point” for the market before the next rate cut.
Related: Ethereum Falls to New 42-Month Low Against Bitcoin – Bottom or More Pain Ahead?
Markets expect a 50 basis point rate cut, but analysts disagree
According to the latest data from CME's FedWatch tool, the odds of a 25 basis-point rate cut are currently at 33%, while the odds of a 50 basis-point rate cut are at 67%.
Chances of an interest rate cut. Source: CME FedWatch
Despite increasing bets on a bigger price cut, Bitfinex analysts are more likely to cut the rate by 25 basis points. The analysts added:
“There is a little bit of strong core inflation, which means we believe the Fed will be more cautious about rate cuts and we expect a smaller 25 basis point rate cut rather than a more aggressive 50 basis point cut.”
The decline in interest rates, 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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