Harvey Hunter, a Junior Content Creator at Cryptonews.com with a background in Computer Science, IT, and Mathematics, seamlessly transitioned from a tech geek to a crypto journalist. With over a decade of crypto coverage, Cryptonews delivers authoritative insights that readers can rely on, combining in-depth market knowledge with hands-on testing of blockchain technologies. The quality journalism from Cryptonews makes it a trusted source in the dynamic world of digital assets.
According to a note from 10x Research CEO Markus Thielen on September 9th, an aggressive U.S. Federal Reserve rate cut could signal economic worry rather than reassurance, which could weigh over Bitcoin and other risk assets. While a 25 basis point cut may lead to long-term price appreciation for Bitcoin as liquidity increases and recession fears ease, a more aggressive 50 basis point cut could have an adverse effect. Thielen cautioned that a more aggressive cut could signal deeper concerns to the markets and cause investors to reduce their exposure to risk assets like Bitcoin.
Recession concerns have gained traction in early August following weak July U.S. jobs data, with the Sahm Rule Recession Indicator jumping to 0.53. This indicator has risen even higher to 0.57 following the release of August’s weak jobs report, causing fears to intensify. While some analysts believe that the Federal Reserve is behind the curve and may have missed signs of labor market weakness, others like Alianza advisor and former Pimco CEO Mohamed El-Erian remain optimistic that the U.S. economy will avoid a recession despite the weak data.
Analysts warn that a U.S. rate cut could present a challenging time for Bitcoin traders, with a 50 basis point rate cut potentially triggering a correction and pushing Bitcoin deeper into a recent slump as recession concerns escalate. A September 2nd report from Bitfinex suggested that a 15-20 percent decline in Bitcoin price could occur when rates are cut, with a potential bottom of $40-50k for BTC. Despite the near-term bearish outlook, historical and technical patterns suggest that Bitcoin could still reach six figures, with some traders pointing to the final quarter of the year as a potential breakout point with epic potential for price action.
It is important to note that crypto is a high-risk asset class, and the information provided in this article is for informational purposes only and does not constitute investment advice. Readers should be aware that they could lose all of their capital when investing in cryptocurrencies. Cryptonews maintains strict editorial standards to ensure factual accuracy and impartial reporting on both established cryptocurrencies and emerging projects. With a veteran team of journalists and analysts, Cryptonews delivers trustworthy insights that readers can rely on in the dynamic world of digital assets.
In conclusion, analysts caution against an aggressive U.S. Federal Reserve rate cut, warning that it could signal economic worry and cause a negative impact on Bitcoin and other risk assets. Despite recession fears intensifying due to weak jobs data, some analysts remain optimistic about the U.S. economy’s ability to avoid a recession. While a U.S. rate cut could present challenges for Bitcoin traders in the short term, historical and technical patterns suggest that Bitcoin still has the potential to reach six figures. It is important for readers to understand the high-risk nature of the crypto asset class and to exercise caution when investing in cryptocurrencies.
