Bitcoin (BTC) Could Plunge To $40K If Fed Lowers Rates, Bitfinex Analysts Say

In a forecast going against the broader market's expectations, analysts at cryptocurrency exchange Bitfinex said in a note to Benzinga that the leading cryptocurrency

Cryptocurrency traders are keeping a close eye on the Federal Reserve's upcoming interest rate decision, which could potentially impact the price of Bitcoin (CRYPTO: BTC). Here's a rundown of the latest developments and what they could mean for the leading digital asset.

Anticipating A Rate Cut: The Federal Reserve is widely expected to lower interest rates at its upcoming FOMC meeting, a move that could influence the price of Bitcoin. If the Fed opts for a 25 basis point rate cut, traders are pricing in a 59% probability of such an outcome.

However, if the central bank decides to lower rates by 50 basis points, the probability of such a scenario stands at 41%, according to the CME FedWatch tool.

Bitfinex analysts are anticipating that Bitcoin could slip to a bottom of $40,000 if the Fed lowers interest rates in the upcoming FOMC meeting as anticipated.

In a note to Benzinga, the analysts said that the leading cryptocurrency might drop by 15-20% from its price at the time of the probable rate cut.

The analysts, however, cautioned that the estimates are speculative and could vary significantly based on evolving macroeconomic conditions.

Impact On Bitcoin: While lower interest rates are generally considered bullish for riskier assets like cryptocurrencies, the correlation between Bitcoin and traditional financial assets has been increasing.

This suggests that broader market conditions will continue to influence the movements of the leading cryptocurrency.

For instance, Bitcoin slid over 4% in the last 24 hours, tracking the stock market's biggest single-day decline since the Aug. 5 sell-off.

Moreover, Bitcoin's 30-day correlation with blue-chip indices like the Nasdaq Composite and the S&P 500 rose from being negative at the start of August to 0.41 and 0.25, respectively, by the end of the month, according to data from The Block.

Investors in the cryptocurrency space are keeping a close eye on the Fed’s decision and its potential impact on the price of Bitcoin. Stay tuned to Benzinga for the latest updates on this developing story.

Benzinga Pro subscribers can track the price of Bitcoin and other cryptocurrencies in real-time. Click here to learn more.

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