Analysts Predict Bitcoin Volatility Ahead of Upcoming US Interest Rate Decision

Bitcoin faces potential downside pressure ahead of the upcoming U.S. interest rate decision, having recently fallen below the crucial $60,000 support level.

Anticipated volatility for Bitcoin may lead to turbulent price movements as the Federal Reserve (Fed) prepares for its next interest rate announcement on September 18. Analysts at Bitfinex have highlighted that the decision could significantly impact the cryptocurrency’s price dynamics, telling:

“Market behavior may vary between bullish optimism and cautious de-risking, depending on whether the rate cut is 25 or 50 basis points, as it would mark a significant macroeconomic shift. We could see this volatility manifest in the form of fluctuating flows within ETFs and perpetual markets.”

This outlook comes just a day before the Fed is expected to announce its first interest rate cut since the COVID-19 pandemic began.

Many analysts are increasingly forecasting a breakout for Bitcoin in October, potentially fueled by the Fed’s anticipated rate reduction.

$52,000 Bitcoin was the price bottom: Bitfinex analysts

On September 14, Bitcoin climbed back above the $60,000 psychological barrier for the first time since August 30, only to quickly lose this support level again.

Nonetheless, recent price activity suggests that Bitcoin may have reached a local bottom around the $52,000 level. Bitfinex analysts explained:

“Our initial assessment that Bitcoin’s dip to $52,756 on September 6 might represent a potential local bottom has been validated. Since then, prices have risen over 15%, driven by a significant increase in Bitcoin ETF net inflows, which totaled $403.9 million over the past week.”

Bitfinex analysts had previously predicted a Bitcoin correction down to the low $50,000s, identifying this as a “critical point” for the market in anticipation of the next rate cut.

Markets expect a 50 basis point rate cut, but analysts disagree

Current data from the CME FedWatch tool indicates a 33% probability of a 25 basis-point rate cut, with a 67% chance for a more substantial 50 basis-point reduction.

Despite the market leaning towards a larger rate cut, Bitfinex analysts believe a 25 basis point reduction is more probable. They noted:

“There are signs of stronger core inflation, which we believe will encourage the Fed to approach rate cuts cautiously. As a result, we anticipate a smaller 25 basis point cut rather than a more aggressive 50 basis point reduction.”

If this interest rate cut aligns with historical chart patterns, Bitcoin could be set for a three-month rally, potentially surpassing $92,000, given that October, November, and December are historically strong months for BTC.

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