Fed News: Is Bitcoin’s $60K Rally at Risk After the Next Fed Move?
The Federal Reserve (Fed) is anticipated to begin its rate-cutting cycle next week, which could significantly impact risk assets like Bitcoin. According to 10x Research, an aggressive 50 basis point (bps) rate cut might indicate economic concerns, prompting investors to pull back from cryptocurrencies and stocks. While traders see less than a 30% chance of such a cut, Friday’s U.S. jobs report has intensified speculation about the Fed’s potential actions. Markus Thielen, founder of 10x Research, cautioned that while the Fed aims to address economic risks, a major cut could signal deeper worries about the economy’s direction.
What Do the Indicators Reveal?
The Chicago Mercantile Exchange’s FedWatch tool shows a 29% likelihood of a 50 bps cut, contrasting with the broader market expectations. Thielen’s concerns echo those of market experts who believe the Fed may be lagging, particularly after the labor market showed signs of weakness in July.
Impact on Risk Assets
Following this news, Bitcoin’s price surged on Friday, approaching $60,000 as traders grew optimistic about a potential large rate cut from the Fed. Bitcoin reached $59,735, marking a 2.5% increase for the day. This rise follows a recovery from September losses, where Bitcoin dipped to $53,300 after a disappointing jobs report in August. Traders expect that the Fed’s decision could bolster risk assets like Bitcoin amid concerns about a slowing U.S. economy, further fueling ongoing discussions about Bitcoin price predictions.
Analyst Insights
However, a 50 bps cut might also lead to corrections in risk assets, warns macro trader Craig Shapiro. He explained that markets reliant on liquidity might push for even larger cuts from the Fed, and until they receive such reductions, assets like Bitcoin could face downward pressure.
Historically, the onset of a rate-cutting cycle hasn’t always led to an increase in asset prices, making investors wary. Bitcoin’s rise from $20,000 earlier in 2023 was largely driven by expectations of Fed easing, raising questions about whether this potential cut is already priced in. Despite this, analysts predict Bitcoin will maintain its bullish momentum, suggesting that a slight decline may have little impact.
The upcoming Fed decision will be crucial, potentially setting the tone for Bitcoin and other risk assets in the near future.
What are your thoughts on this warning—could it signal further declines?
#BTC
