A potential 50 basis point (bps) interest rate cut by the US Federal Reserve might negatively impact Bitcoin prices, cautions 10x Research. This move could signal economic concerns, causing investors to pivot away from risk assets like cryptocurrencies.
As of September 6, 2024, the US economy showed signs of slowing job growth, influencing the Fed to consider rate cuts to avoid harming businesses with high interest rates. However, a substantial rate cut could unintentionally highlight economic unease.
Historically, central banks adjust interest rates by 25 bps increments, but the urgency might demand significant cuts. In 2022, the Fed increased rates by 50 or 75 bps to curb inflation.
Leading figures, including Markus Thielen of 10x Research and macro trader Craig Shapiro, express concerns that such a cut could deeply affect risk assets. Despite differing views on the potential for a 50 bps cut, there is a consensus on the critical nature of the Fed's decisions.
Bitcoin, currently trading at $55,296 with a market cap of over $1.09 trillion, might face challenges, although some analysts predict a rally in October 2024.
