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Bitcoin (BTC) Price Stumbles Below $65,000 as Fed Holds Interest Rates, Indicates Possible September Cut

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Joel Frank
About Author

Since graduating with a degree in economics from the University of Birmingham in 2018, Joel has worked as a financial market/cryptocurrency analyst. He firmly believes that emerging crypto technology...

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The Bitcoin (BTC) price has stumbled below $65,000 in wake of the latest Fed policy decision, where the central bank held interest rates steady at 5.25-5.50% as expected, and Fed chair Jerome Powell indicated a potential rate cut coming as soon as September.

That a more than 2% drop on the day for Bitcoin, whose market cap was last around $1.276 trillion.

Bitcoin (BTC) Price Stumbles Below $65,000 as Fed Holds Interest Rates, Indicates Possible September Cut
BTCUSD / Source: TradingView

The tone of the Fed and Powell’s remarks suggested that a September rate cut isn’t a done deal yet. Rather, the data will need to continue to point in that direction (i.e. more inflation and labor market softening).

That perhaps left some market participants who had been looking for a more concrete indication that rate cuts are coming somewhat disappointed.

That could explain the downside in the Bitcoin price. That said, the reaction in traditional financial markets was dovish, suggesting growing confidence that rate cuts are coming.

As per CME data, money markets continue to imply a 100% chance of the Fed cutting interest rates by at least 25 bps.

Moreover, CME data shows the implied likelihood of a 50bps rate cut in September to 18.2% from 13.2% prior to the meeting.

US 2- and 10-year yields both hit their lowest levels since March, the former dipping under 4.30%, the latter approaching 4.0%.

The big-tech stock packed Nasdaq 100 index pumped an impressive more than 3.5%, meanwhile.

Bitcoin (BTC) Price Stumbles Below $65,000 as Fed Holds Interest Rates, Indicates Possible September Cut
Nasdaq 100 CFD / Source: TradingView

Can Macro Tailwinds Power a Bitcoin Price Rebound?

US yields have been in a downtrend since April. The Nasdaq 100, meanwhile, while correction-prone, has been trending higher all year.

With Fed rate cuts seemingly now right around the corner, these trends could persist.

The Bitcoin price tends to perform well in an environment of easing financial conditions (i.e. lower yields) and equity outperformance.

An improving macro backdrop could be setting the stage for a rebound in the weeks ahead.

But Bitcoin traders remain worried about a potential rise in near-term sell pressure following recent major wallet movements.

The US government moved $2 billion of Silk Road confiscated Bitcoin on Monday.

That killed a promising rally to $70,000, with the Bitcoin price now down 7% from earlier weekly highs. Further Mt Gox repayments may also be weighing on the market.

Bitcoin bears will be eyeing a retest of support in the $63,600 area. But price risks remain tilted to the upside once US government and Mt Gox sell pressure FUD eases.

As Fed rate cuts near and the macro backdrop improves, as post-halving miner selling eases and the prospect of a very pro-Bitcoin Donald Trump presidency nears, Bitcoin remains odds on to surge to fresh record highs this year.

With a test of $100,000 highly possible in 2024 or 2025, Bitcoin is a strong candidate for best crypto to invest in right now.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.

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