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September volatility and Fed rate cuts could shape Bitcoin's path to $40,000 target.
Key Takeaways
Bitfinex analysts expect Bitcoin to reach $40,000 in September, influenced by potential Fed rate cuts. Historical data shows September as a volatile month for Bitcoin, with an average return of -4.78% since 2013. <?xml encoding="UTF-8"?>Bitcoin (BTC) can reach the mid $40,000 zone in September following interest rate cuts in the US, as reported by Bitfinex analysts.
In the latest aggressive rate-cutting cycle of 2019, BTC fell by 50% after the Fed decided to take the interest rates lower. However, the analysts highlighted that the actual conditions differ, as Bitcoin underwent two halving events and the world’s economy isn’t dealing with a global pandemic.
“If we apply a similar logic to the present, however, a 15-20 percent decline from Bitcoinʼs price at the time of a rate cut could be anticipated,” they added.
Assuming the price of BTC at around $60,000 before interest rates are cut, this would place a potential bottom between the low $50,000 and $40,000 levels.
Notably, Bitfinex analysts underscored that this is not an arbitrary number, as they are speculating over evolving macroeconomic conditions.
Potential outcomes
The analysts predict that a 25 basis point rate cut could initiate a gradual uptrend for Bitcoin after an initial sell-the-news event. This scenario signals the Fed’s confidence in economic resilience and could lead to long-term price appreciation as recession fears ease.
On the other hand, a more aggressive 50 basis point cut might trigger an immediate spike of up to 8% in Bitcoin’s price due to heightened liquidity expectations.
However, this surge could be short-lived, potentially followed by a correction mirroring past instances where aggressive rate cuts initially boosted asset prices before economic uncertainties tempered gains.
Moreover, historical data shows September has an average return of -4.78% for Bitcoin since 2013, with a typical peak-to-trough decline of 24.6% since 2014. This volatility is often attributed to increased human-driven trading activity as fund managers return from summer vacations.
While the potential rate cut adds complexity to market predictions, analysts note that when August ends in the red, September has occasionally delivered positive returns, challenging the assumption of a bearish month.
Despite short-term caution, particularly given September’s historical volatility, Bitfinex analysts maintain a long-term bullish outlook for Bitcoin. The upcoming Federal Open Market Committee (FOMC) meeting and potential rate cuts are expected to be pivotal events for Bitcoin and the broader crypto market.
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