Cryptocurrency braces for market swings as the Federal Reserve’s interest rate decision looms. Bitcoin is bracing for increased volatility as it struggles to maintain support above the $60,000
Cryptocurrency braces for market swings as the Federal Reserve’s interest rate decision looms.
Bitcoin is bracing for increased volatility as it struggles to maintain support above the $60,000 level ahead of the Federal Reserve’s upcoming interest rate decision on September 18. Currently trading at $59,404, the cryptocurrency faces potential price swings depending on the Fed’s monetary policy, with analysts forecasting a shift in market behavior based on whether the rate cut is 25 or 50 basis points. As traders await the decision, Bitcoin’s recent price movements suggest a possible bottom at $52,000, though further downside remains a possibility.
Bitcoin’s price is under pressure as it hovers below the critical $60,000 support level, creating uncertainty ahead of the Federal Reserve’s (Fed) interest rate decision on September 18. The cryptocurrency, currently trading at $59,404, faces potential volatility depending on the Fed’s monetary policy adjustments, which could trigger either bullish momentum or cautious de-risking, according to analysts from Bitfinex.
The upcoming interest rate cut, the first since the start of the COVID-19 pandemic, is expected to play a significant role in Bitcoin’s price direction. According to Bitfinex analysts, the extent of the rate cut—whether it’s 25 or 50 basis points—could lead to contrasting market reactions. A smaller cut may boost investor confidence, while a larger reduction could spur cautious selling as markets adjust to new macroeconomic conditions. Analysts also anticipate that ETFs and perpetual markets could experience notable fluctuations in response to the decision.
Bitcoin briefly climbed above the $60,000 mark on September 14, marking its first breach of this psychological barrier since August 30, only to fall back below the support level. Bitfinex analysts maintain that the recent price action suggests Bitcoin has found a local bottom at $52,000. They highlighted that a price dip to $52,756 on September 6 may have represented the bottom, as Bitcoin has since rebounded by over 15%, bolstered by strong ETF inflows of $403.9 million in the past week.
Despite this recovery, analysts warn that a deeper correction toward the low $50,000 range could still be on the cards, which they view as a critical juncture for the market, especially in light of tomorrow’s rate decision. The impending announcement could either pave the way for a breakout or increase downside risks, making the Fed’s decision a key event for Bitcoin’s short-term trajectory.
Looking further ahead, some analysts are predicting a Bitcoin breakout in October, which could be catalyzed by the Fed’s interest rate cut. Should the decision align with market expectations and investor sentiment, Bitcoin could see a bullish resurgence, but for now, uncertainty looms over its immediate price action.
While many are focused on Bitcoin’s price trajectory, analysts from Fairlead Strategies have raised concerns about Bitcoin’s short-term overbought conditions, indicated by technical tools like the MACD and stochastics. The MACD (Moving Average Convergence Divergence) tracks momentum through the relationship between moving averages, while stochastics compare recent closing prices to historical price ranges to signal whether an asset is overbought or oversold. These indicators suggest that Bitcoin may be in an overbought zone, which could trigger a pullback if buying momentum weakens.
