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Bitfinex analysts warn that Bitcoin could drop by up to 20% as the Federal Reserve’s upcoming interest rate decision introduces uncertainty.
The price of Bitcoin (<a href="https://crypto.news/price/bitcoin/" target="_blank" rel="noopener noreferrer nofollow">BTC</a>) might be on the verge of a 20% decline, as <a href="https://crypto.news/tag/bitfinex/" target="_blank" rel="noopener noreferrer nofollow">Bitfinex</a> analysts warn that the cryptocurrency’s future is highly contingent on this month’s <a href="https://crypto.news/tag/federal-reserve/" target="_blank" rel="noopener noreferrer nofollow">Federal Reserve</a> interest rate decision.
In a <a href="https://blog.bitfinex.com/bitfinex-alpha/bitfinex-alpha-what-will-happen-to-btc-when-rates-fall/" target="_blank" rel="noopener noreferrer nofollow">research report</a> published on Sept. 2, the analysts attributed Bitcoin’s recent 32% surge to speculation of a dovish Fed stance. However, they note that the anticipated rate cut could “significantly influence both Bitcoin’s short-term volatility and long-term trajectory.”
<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">
 A 25 basis point cut is likely to signal the beginning of a typical easing cycle, which could lead to long-term price appreciation for Bitcoin as liquidity increases and recession fears ease.
 Bitfinex analysts
</blockquote>
The analysts further warned that a more “aggressive” 50 basis point cut might cause an immediate price spike but could be followed by a “correction as recession concerns escalate.”
In the past week, market dynamics have shifted. Spot holders are de-risking now, the analysts say, adding that perpetual market speculators are attempting to “buy the dip,” which can be seen in “significant long open interest on BTC perpetuals.”
<h2 class="wp-block-heading" id="bitcoin-faces-turbulent-month">Bitcoin faces turbulent month</h2>
Analysts predict that Bitcoin could face a 15-20% decline following a rate cut, with a potential bottom between $40,000 and $50,000. This forecast is based on historical data showing that cycle peaks in percentage returns typically diminish by 60-70% each cycle, alongside a reduction in average bull market corrections. However, they emphasize that changing macroeconomic conditions could quickly alter this outlook.
Historically, September <a href="https://crypto.news/bearish-september-brought-155m-in-cryptocurrency-liquidations/" target="_blank" rel="noopener noreferrer nofollow">has been a turbulent</a> month for Bitcoin, with an average return of -4.78% and peak-to-trough declines of around 24.6%. The analysts note that this volatility, coupled with the risk of a “sell-the-news” reaction post-rate cut, could create “both risks and opportunities for traders.”
The Federal Reserve will meet on Sept. 17 and 18, with the majority of analysts and experts <a href="https://www.cnbc.com/2024/09/02/the-peak-interest-rate-era-is-over-heres-what-investors-are-watching.html" target="_blank" rel="noopener noreferrer nofollow">expecting an interest rate cut</a>. However, it’s unclear how significant the change might be, as the U.S. economy shows signs of steady disinflation and strong consumer spending.
Read more: <a href="https://crypto.news/metaplanet-taps-sbi-vc-trade-for-bitcoin-custody/" rel="noopener noreferrer nofollow"> Metaplanet taps SBI VC Trade for Bitcoin custody </a>

Bitcoin price could see 20% drop, analysts warn

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