Analysts Say Bitcoin Could Trend Downward Despite Fed Rate Cuts
The BitFinex Report
As crypto players anticipate possible interest rate cuts by the Federal Reserve, analysts have cautioned that Bitcoin might witness a short-term dip, challenging the popular assumption that rate cuts are usually bullish for risky assets like crypto.
Analysts from the Bitfinex crypto exchange released a report on September 3rd, claiming that the crypto markets are poised for a ‘sell the news’ scenario as the possibility of Fed rate cuts continues to increase. The analysts say their report is supported by data showing massive selling in crypto spot markets since August 26th, especially at the beginning of US trading sessions.
Bitfinex’s Report Shows Increased Selling Pressure in the Bitcoin Market
According to the report, the CVD (Cumulative Volume Delta) for Bitcoin spot trading pairs across leading centralized exchanges had dropped roughly 66% since last Thursday. For beginners, CVD is a metric for measuring the difference between buying and selling volumes on trading platforms. It helps traders determine market pressure at a given time. A depreciating CVD usually signals massive selling pressure in a particular market.
While Bitfinex analysts maintain that rate cuts are positive for the crypto markets in the long term, they argue that cryptocurrencies have performed poorly in the short term following the previous four Federal Reserve rate cuts.
These analysts believe that Bitcoin and other cryptocurrencies may trend downward for two to three weeks if the Fed cuts interest rates later this month. They say stocks will experience modest price corrections while BTC might plunge significantly.
“BTC Could Plunge to $44,000,” Analysts Claim
In their report, Bitfinex analysts predict a drop to $44,000 before Bitcoin rallies again. They say the bearish move will be fueled by short-term buyers who look to book profits immediately after positive news, like Fed rate cuts, has been released.
It is important to mention that September has been a ‘red month’ for Bitcoin since 2013. CoinGlass reported earlier this week that BTC has closed September with average losses of 4.6% in the past eleven years. If history repeats, Bitcoin could plummet to around $56,000 by September 30th.
Meanwhile, Fineqia’s market analyst Matteo Greco expects short-term price falls to last for only a few weeks as he anticipates a rally in October.
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