2024

Jerome Powell

Bitcoin

Impact

<p>The recent FED decision to cut its key rates divides crypto analysts. While some hope for a boosting effect on Bitcoin, others fear a negative reaction. As the FED could start a cycle of rate cuts, a 50 basis point reduction, expected next week, could surprise the markets. This could affect risky assets, including Bitcoin, by highlighting deeper economic concerns.</p>
<h2 id="h-bitcoin-la-reaction-a-la-baisse-des-taux-par-jerome-powell">Bitcoin: The reaction to the rate cut by Jerome Powell</h2>
<p>The FED, after <a href="https://www.cointribune.com/en/the-fed-caves-in-and-vows-to-lower-its-rates/" target="_blank" rel="noopener noreferrer nofollow">capitulating</a>, is about to start <strong>a cycle of rate cuts</strong>, but according to <a href="https://www.coindesk.com/markets/2024/09/09/a-050-fed-rate-cut-could-raise-alarm-for-bitcoin-10x-research-warns/" target="_blank" rel="noopener noreferrer nofollow">10x Research</a>, this could sound the alarm for Bitcoin. An aggressive rate cut could signal <strong>economic concerns rather than confidence</strong>, putting pressure on risky assets like Bitcoin.</p>
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<p>Currently, traders estimate <strong>less than a 30% chance for a 50 basis point cut next week</strong>. Indeed, such a decision could reflect growing concern about the economy, pushing investors to reduce their exposure to risky assets, including Bitcoin.</p>
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<p>Markus Thielen, founder of 10x Research, noted that this cut could indicate <strong>deeper economic concerns</strong>.</p>
<p>Conversely, <strong>a more modest cut could be perceived as a prudent measure</strong> rather than a signal of economic panic. This could mitigate the negative effects on Bitcoin and other risky assets.&nbsp;</p>
<p><strong>Hypotheses:</strong></p>
<ul>
 <li>A 50 basis point cut could signal increased economic concern, putting pressure on Bitcoin, potentially reducing its value by 5 to 10%;</li>
 <li>A more modest 25 basis point cut could be seen as a prudent measure, minimizing negative effects on Bitcoin and leading to limited fluctuation of 2 to 5%;</li>
 <li>Anticipation of a rate cut could already be priced into BTC, making the actual impact of the FED’s decision relatively weak, with expected variations around 3%.</li>
</ul>
<p>However, <strong>uncertainty about the actual size of the cut keeps BTC investors on their toes</strong>.</p> 
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<h2 id="h-crypto-phare-impact-et-reactions">Key Crypto: Impact and Reactions</h2>
<p>The cycle of rate cuts could also affect the dynamics of cryptocurrencies. While some see <strong>rate cuts as an opportunity for cryptos</strong>, others warn of a potential correction. Here are some key points to consider:</p>
<ul>
 <li>A 50 basis point cut could signal economic urgency;</li>
 <li>Risky markets could react by reducing their exposure;</li>
 <li>Bitcoin has already experienced a strong rally due to rate cut expectations.</li>
</ul>
<p>Craig Shapiro, macro trader, points out that <strong>liquidity-hungry markets could push the FED to opt for a more significant cut</strong>, but current price levels of risky assets could lead to a correction.</p>
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     <p lang="en" dir="ltr">The Fed doesn't want to start with a 50bps cut because frankly, at this point, the economy doesn't need them to panic. <br><br>The market wants them to start with 50 and go bigger and faster because the market acts like a petulant child in constant need of "moar" liquidity. I have…</p>— Craig Shapiro (@ces921) <a href="https://twitter.com/ces921/status/1832090295535829090?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">September 6, 2024</a>
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<p>The FED might not want to cause premature panic, preferring to avoid too large a first cut. This could delay any substantial reaction in the crypto market.</p>
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<p>Despite fears of this decision having a detrimental effect on Bitcoin, some experts believe the FED could, paradoxically, pave the way for <a href="https://www.cointribune.com/en/bitcoin-the-fed-paves-the-way-for-100000/" target="_blank" rel="noopener noreferrer nofollow">Bitcoin to reach $100,000</a>.</p>

50 Basis Points Cut By The Fed, An Imminent Danger For Bitcoin?

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