According to 10x research, a cut of 50 basis points (bps), or 50 basis points in the interest rate by US Federal Reserve this month may negatively impact Bitcoin (BTC). cautions.
A 50 BPS rate cut could shock the market
Then it was started The Fed will now begin slashing rates in order to stimulate the economic growth. In March 2022, it raised interest rates due to the rampant inflation caused by COVID supply chain problems and money printing. There is the possibility that a Fed rate cut of 50 bps could cause Bitcoin and other risk-on assets to be impacted.
Bureau of Labor Statistics to release data on September 6, 2024 stated While unemployment is down slightly, US jobs are lower than anticipated. It has allowed the Fed to begin its rate-cutting campaign, since it does not want to damage businesses irreparably with high interest rates.
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The 10x research team notes that the 50-bps cut in September 2024 might indicate a feeling of unease toward the economy. Unintentionally, it could convey to the public that the Fed feels the economy is beyond its control. looming Investors are forced to abandon risky investments such as stocks, cryptocurrencies and other financial instruments due to the economic slowdown.
Uninitiated people may not know that one basis point equals 1/100 of a percent. Central banks in different countries increase and decrease rates according to urgency, usually by 25 basis point increments or more. In 2022, the Fed increased interest rates several times by up to 75 bps or 50 bps in order to combat inflation.
Markus Thielen of 10x Research shared a message with his clients.
Although a Fed cut of 50 basis points might cause the markets to be more concerned, their primary concern will be managing economic risks and not market reaction.
Adding:
We believe that there is a 29% chance of seeing a 50-basis point reduction, which contrasts our opinion and the consensus. It is becoming more and more common to hear that the Fed has been behind schedule, as it missed the signs of weakness in the labor market after being caught by surprise last July.
It is critical that the Fed walks a thin line
Macro trader Craig Shapiro echoed The findings of 10x Research in a blog post at X.com, stating that despite pressure from the markets on the Fed. “go bigger and faster” It should not start with a cut of 50 basis points.
Shapiro also added that without liquidity the market is unable to function. “revolts, sells off and finds the lower put strike level” That forces the Fed’s rate reductions to be accelerated and for more liquidity. Shapiro says that until the Fed caves in to the markets and offers them what the market wants, risk assets’ value will fall.
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Other analysts, however, have a different view. think Bitcoin may start a rally again around October 2024. BTC was trading at $55,296 as of press time with a global market cap exceeding $1.09 billion. according CoinGecko is a free online game.
Featured image from Unsplash.com. Chart by TradingView.com
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Source: www.newsbtc.com