Bitcoin kept calm at around the $58.5K mark on Tuesday morning with mild movements in the altcoin market. The market is preparing for a potential Federal Reserve interest rate cut on September 18, with a 67% possibility of a 50 basis point rate drop. This move is expected to have a positive effect on risk assets.
Little has for Bitcoin and the broader cryptocurrency markets as traders await the Federal Open Market Committee (FOMC) meeting on Wednesday, where officials are expected to announce their first-rate cuts in four years.
According to Australian cryptocurrency trading firm Zerocap, following the Federal Reserve’s rate announcement on September 18, Bitcoin is “tough to call” and may fall as low as $53,000 or increase as high as $65,000.
Wet, however, noted that the price action is “tough to call” because of the ongoing uncertainty around the short-term effects of rate decreases and the volatility of the forthcoming US election in November.
Following the most recent range lows, the downside goal for BTC is 53,000, while the upside target is 65,000 once the market breaks above the descending wedge.
He added that the market has already factored in the 62% possibility that the Fed will lower interest rates by at least 50 basis points (0.5%), which helped spark the temporary spike that saw Bitcoin reach $60,000 on September 13.
The Fed is expected to announce a reduction in interest rates, starting the so-called easing cycle that has historically boosted risk assets, such as bitcoin.
Rate reductions have historically been seen favorably by the risk sector since they enable investors to borrow money at a cheaper cost and take on more risk because cash and treasuries pay less interest.
Nonetheless, some economists have cited prior market action from 2001 and 2007, when rate decreases came before of recessions, especially when weakening macroeconomic conditions were present.