Bitcoin (BTC), the leading cryptocurrency, has experienced a notable decline, erasing the gains it achieved following the recent decision by the US Federal Reserve (Fed) to cut interest rates.
Peterson notes that two of the three downturns in Bitcoin’s history occurred during established bear markets in 2018 and 2022, conditions that do not reflect the current market situation. This leads him to believe that the chances of a price rise are closer to 90% this year.
Furthermore, Bitcoin’s track record suggests it has a nearly perfect chance of holding its gains six months post-September 21. Peterson estimates there is at least a 70% probability that Bitcoin will not drop below the $100,000 mark again.
Ryan Lee, chief analyst at cryptocurrency exchange Bitget, also points to the recent 25-basis-point rate cut by the Fed as a factor that initially boosted Bitcoin’s price, briefly pushing it above $117,000. This cut, the first in nine months, reflects increased liquidity in the market.
Historically, Bitcoin has experienced a dip of 5% to 8% following rate cuts before resuming its upward trend, suggesting a possible “sell the news” phase in the coming days.
Despite these fluctuations, Lee remains bullish about the macroeconomic environment, asserting that lower yields on money-market funds (MMFs) are likely to direct capital toward alternative investments, such as cryptocurrencies.
He emphasizes Bitcoin’s role as a hedge in this risk-on climate, especially with approximately $7.2 trillion currently held in cash-like instruments.
However, they also caution that if inflation or economic growth data hinder the Fed’s ability to proceed with further cuts, Bitcoin might stabilize within a range of $110,000 to $115,000 as institutional participation and ETF assets under management provide a solid floor.
Featured image from DALL-E, chart from TradingView.com
