After the first Fed cut, Bitcoin is in for a bumpy ride
Crypto markets were exuberant about the US Federal Reserve's first rate cut. But the reality is likely more complicated.
On the surface, conditions appear primed for the next leg of a cryptocurrency bull run. Last month, the US Federal Reserve cut interest rates, and now China is about to be hit with a significant stimulus package.
However, Australian digital asset fund managers caution that while new all-time highs could be on the horizon, the next six months are likely to bring volatility for Bitcoin and other cryptocurrencies as investors closely monitor the Fed’s actions.
“Even though we knew this rate cut was coming and everyone said it was priced in, the market is still incredibly reflexive to what the Fed does,” said Egor Sidelska of Magnet Capital, a fund with around $50 million in crypto assets under management. He added that he expects “30-40% [Bitcoin] pullbacks if the market gets scared".
The Federal Reserve cut interest rates by 50 basis points to a range of 4.75% to 5% during its September meeting, answering long-standing questions about when rates would begin to fall. The move caused Bitcoin to spike from USD57,000 the day before the cut to just under USD66,000 days later.
