Bitcoin may be on the verge of a significant price drop, potentially falling between 15-20% this month, according to a Bitfinex analyst. The anticipated decline could push Bitcoin’s value down to the $40,000-$50,000 range.
The analyst’s caution stems from historical patterns, where Bitcoin’s gains tend to decrease by 60-70% during each market cycle. September, in particular, has a reputation for volatility, with an average decline of 24.6% observed during this month in past years.
Rate Cuts and Their Impact on Bitcoin’s Price
Bitcoin’s recent surge of over 32% since early August has been largely driven by traders speculating that the Federal Reserve may adopt a more dovish stance. Should the Fed opt to cut interest rates by 25 basis points, Bitcoin could benefit from long-term price growth, spurred by increased liquidity and a reduction in recession fears.
However, a more aggressive rate cut of 50 basis points might trigger a short-term price surge, followed by a correction if concerns about a recession intensify.
Bitcoin’s Correlation with Traditional Assets
The cryptocurrency’s price movement is increasingly mirroring that of traditional financial assets, such as the S&P 500, making it more vulnerable to global economic shifts. Decisions made by other central banks, including the European Central Bank, the Bank of Japan, and China’s liquidity measures, could also have a significant impact on Bitcoin’s value.
Given Bitcoin’s historical susceptibility to September volatility, investors should brace for a possible sharp decline in its price. As the market braces for potential rate cuts, caution remains key for those involved in the cryptocurrency sector.
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