Bitcoin’s recent decline might seem surprising, given that the Federal Reserve is expected to cut interest rates this week. But, there’s more to the story than meets the eye.
Why the Dip?
Bitcoin’s price dropped by 2.7% in the past 24 hours, even though the Fed is expected to lower interest rates for the first time in four years. This move is intended to stimulate the economy and combat inflation.
While rate cuts are usually seen as a positive development for risk-on assets like Bitcoin, things are a bit different this time. Experts believe that the impact of rate cuts might not be as bullish as expected.
Here’s why:
- Economic Uncertainty: Rate cuts during times of economic uncertainty and high unemployment could signal to investors that the Fed is struggling to manage the situation. This could lead to a lack of confidence in the economy’s health and even fears of a recession.
- “Buy the Rumor, Sell the News”: Investors might have already driven up the price of Bitcoin in anticipation of the rate cuts. Now, they might be selling to lock in their profits before the actual event, leading to a price decline.
- Inflation Concerns: While inflation has cooled down, it’s not completely gone. The recent core CPI data shows that the fight against inflation is far from over, which could make investors hesitant to invest in risk-on assets.
The US Election: A Wild Card
The upcoming US Presidential Election could have a significant impact on Bitcoin’s future price.
- Trump’s Crypto Support: Former President Donald Trump has expressed support for the crypto industry, which could lead to a bullish scenario for Bitcoin if he wins the election. Some analysts predict that Bitcoin could reach $90,000 by the end of 2024 in this scenario.
- Harris’s Impact: A win for Vice President Kamala Harris could result in a less favorable environment for crypto, potentially pushing Bitcoin down to $30,000.
The bottom line: Bitcoin’s recent dip might be a temporary blip, but the upcoming Fed rate cuts and the US Presidential Election could have a significant impact on its future price trajectory. /p>
