Bitcoin price is facing the threat of more downside pressure as it struggles to maintain the key $60,000 support level ahead of the Federal Reserve’s (Fed) interest rate decision on September 18. The volatility in Bitcoin (BTC) could lead to choppy price action in the coming days, with analysts from Bitfinex warning of potential market swings depending on the monetary decision.
According to Bitfinex analysts, the upcoming interest rate decision could result in increased price volatility for the world’s first cryptocurrency. The analysts stated, “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 may be reflected in flows across ETFs and perpetual markets, leading to increased fluctuations.
The prediction of heightened volatility comes just a day before the Fed is expected to announce its first interest rate cut since the onset of the COVID-19 pandemic. Many analysts are now anticipating a potential Bitcoin breakout in October, which could be triggered by the Fed’s interest rate cut.
Despite briefly recovering above $60,000 on September 14, Bitcoin lost the key support level on the same day. However, Bitfinex analysts believe that the cryptocurrency may have bottomed out around $52,000. They explained, “Our earlier view that Bitcoin’s dip to $52,756 on September 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.”
Bitfinex analysts had previously predicted a correction for Bitcoin into the low $50,000 range, which they consider a critical point for the market ahead of the upcoming interest rate cut. Despite market expectations leaning towards a 50 basis point rate cut, Bitfinex analysts believe a 25 basis points rate cut is more likely due to slightly stronger core inflation.
The interest rate cut, combined with historical chart patterns, could potentially set Bitcoin up for a three-month rally above $92,000, as October, November, and December are historically bullish months for BTC. The market is eagerly awaiting the Fed’s decision and its impact on Bitcoin’s price trajectory in the coming weeks.