As the date set for the decision Fed rate cut comes closer, Bitcoin has entered a period of uncertainty, with prices potentially fluctuating between $53,000 and $65,000. Australian crypto trading firm Zerocap’s chief investment officer Jonathan de Wet highlighted the challenging nature of predicting Bitcoin’s direction under current market conditions.
Fed Rate Cuts Fuel Speculation
As per data from CME Group’s FedWatch tools, the market believes a 69% likelihood of the Fed rate cut by at least 50 basis points (0.5%). This prediction follows Bitcoin’s brief rally to $60,000 on September 13, driven by robust inflation data, particularly from the Consumer Price Index (CPI) and Producer Price Index (PPI).
Despite the optimism from the recent rally, de Wet expressed concerns. “The price action is tough to call due to uncertainty surrounding the impact of rate cuts and the upcoming US election in November,” he said. Zerocap currently predicts a potential downside for Bitcoin at $53,000 if it dips, while an upside could push it to $65,000 if the price breaks through resistance levels.
US Election Adds to Market Uncertainty
In addition to Fed rate cuts, the looming US presidential election is another major factor adding to Bitcoin’s volatility. De Wet believes that the election’s outcome could significantly influence the crypto market. He said, “It’s tough to determine Bitcoin’s direction until closer to the election. However, positive risk sentiment could emerge in the short term.”
At the time of writing, Bitcoin is trading at around $58,788, slightly down from its $60,000 peak on September 13. This rise was primarily fueled by strong inflation data, which pointed to more favorable conditions for risk assets like cryptocurrencies.
Fed Rate Cuts Could Signal a Shift
Zerocap’s de Wet noted that the Fed has delayed its initial rate cut, but he believes the decision is nearing. “We support the 50 basis points rate cut scenario rather than the more conservative 25 basis points,” he explained. According to the FedWatch Tool by CME Group, there is a 69% chance of a 50 bps cut on September 18, spurring intense debate among financial analysts.
Some view rate cuts as beneficial for risk assets, allowing for easier borrowing and higher investment in sectors like cryptocurrencies. However, others have pointed to historical precedents, noting that rate cuts preceded recessions in both 2001 and 2007.
Election Outcomes May Influence Bitcoin’s Trajectory
The uncertainty around the US election, particularly regarding Vice President Harris’ standing in the polls, continues to affect the market. Harris is ahead in the polls and recently won a debate against Trump. If the odds shift towards the Republicans, it could change the landscape, especially for assets like Bitcoin, banks, and energy.
As the Fed rate cut decision and election results draw near, Bitcoin’s future remains unpredictable. Investors are closely monitoring these events, hoping for clearer signals that could stabilize or further disrupt the crypto market.
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