Bitcoin Price Forecast: Fed Meeting Impact on Cryptocurrency Market
The Bitcoin price experienced a brief dip below the crucial $58,000 mark on Monday but managed to recover throughout the day, currently hovering around $58,530. As the Federal Reserve meeting approaches, the Bitcoin price is expected to gain momentum once again. Australian crypto trading firm Zerocap is anticipating a price movement of approximately ten percent.
Bitcoin’s current state is described as „hard to predict“ by Zerocap, with potential outcomes ranging from a drop to $53,000 or a surge to $65,000 following the US Federal Reserve’s interest rate decision on September 18. Jonathan de Wet, the Chief Investment Officer at Zerocap, shared with Cointelegraph that the market is now anticipating a 67 percent likelihood of the Fed cutting rates by at least 50 basis points (0.5 percent). This expectation has already contributed to a brief rally that saw Bitcoin reach $60,000 on September 13.
Market Speculation and Uncertainty
Zerocap is among those advocating for a 50 basis point rate cut, contrasting with more conservative forecasts of 25 basis points. The impending rate cut has sparked heated debates in recent days, as analysts remain divided on whether this move will be positive or negative for risk assets like cryptocurrencies.
Historically, rate cuts have been viewed positively for risk sectors, enabling investors to borrow at lower costs and divert investments from cash and government bonds to riskier assets due to reduced interest rates. However, some analysts have pointed to the market movements in 2001 and 2007 when rate cuts preceded recessions, particularly in weak macroeconomic conditions.
De Wet added that uncertainty surrounding the upcoming US elections is also weighing on the crypto market, as investors are unsure about the potential impact of a Kamala Harris victory on the crypto sector in the USA. With Harris leading in polls and delivering a convincing performance over Trump in a recent debate, a shift in favor of Republicans could prompt attention to long trades in banks, energy, and Bitcoin.
Outlook and Recommendations
A price reaction of approximately ten percent is deemed realistic considering the magnitude of the decision and the hype surrounding it. Whether a rate cut will indeed spur a rally in riskier assets or signal the calm before a recessionary storm remains to be seen. Entering the market before the rate decision is still highly risky and not advisable. However, for those already invested, staying the course is recommended.
If the rate decision favors the market, interested individuals may find value in exploring The AKTIONÄR’s Crypto TSI Index. This index allows investors to automatically invest in ten of the most trending cryptocurrencies with a single product.
Disclosure of Conflicts of Interest
It’s important to note that the Chairman and majority owner of the publishing company Börsenmedien AG, Mr. Bernd Förtsch, has direct and indirect positions in the financial instruments discussed in the publication, including Bitcoin, which could benefit from any resulting price movements. Similarly, the Managing Director of Börsenmedien AG, Mr. Leon Müller, has also entered positions related to the mentioned financial instruments.
Further disclosures include the ownership of Krypto TSI Index stocks in a Real-Depot of Börsenmedien AG, as well as the development and licensing agreement for an index used as the underlying asset for financial instruments.
In conclusion, the cryptocurrency market, particularly Bitcoin, remains sensitive to external factors such as central bank decisions and political events. Investors are advised to stay informed, exercise caution, and consider potential conflicts of interest when making financial decisions in this volatile market.