The employment data released by the United States last week was lower than market expectations, raising concerns about a recession in the United States. Federal Reserve Board Governor Christopher Waller made it clear last Saturday that the time has come to cut interest rates and would not rule out considering an expansion of interest rate hikes. At that time, traders bet on the probability that the Fed would raise interest rates by 2% at a time in September soared to more than 50%.
Although interest rate cuts are usually a good thing for risk markets, Bitcoin fell instead of rising due to the decline in U.S. stocks and concerns about an economic recession.
10x Research: The Federal Reserve’s 50 basis point interest rate cut may be detrimental to Bitcoin
In response to this situation, Markus Thielen, founder of cryptocurrency research institution 10x Research, warned in a report yesterday (9th) that if the Federal Reserve cuts interest rates by 50 basis points at a time in September, it "may sound an alarm bell for Bitcoin."
The report said that last Friday's non-farm employment report laid the foundation for the Federal Reserve to start the interest rate cutting cycle at the FOMC meeting on September 18, but if it cuts interest rates sharply by 50 basis points (0.50%), it is likely to indicate that the central bank will Concerns about the economic outlook highlight the agency's urgency to control economic conditions and trigger risk aversion in financial markets, thereby putting downward pressure on risky assets including Bitcoin and stocks.
Thielen noted:
A 50 basis point rate cut next week could mean growing worries about the economy or being behind the curve in dealing with the coming slowdown, causing investors to reduce exposure to risk assets like Bitcoin (BTC) and stocks.
While a 50 basis point rate cut by the Fed may signal deeper concerns to the market, the Fed's primary focus will be on mitigating economic risks rather than managing market reactions.
Further reading: Arthur Hayes explains: Why the Fed’s rate cut won’t help Bitcoin?
The market predicts that the chance of a 2-digit drop in September is less than 30%
At the time of writing, the CME Group's FedWatch tool shows that the probability of the Federal Reserve cutting interest rates by 50 basis points next week to a range of 4.75% to 5% is 27%, and it will cut interest rates by 1 basis point, which is 25 basis points to 5% ~ The probability of 5.25% is as high as 73%.
Bitcoin Two Reversal Indicators Recover from Oversold Levels, Showing Short-Term Rebound Potential
Also worth noting, 10x Research noted in a new report today that Bitcoin is trying to rebound after last week’s sharp decline. Currently, 2 of Bitcoin's 3 reversal indicators have recovered from deeply oversold levels, indicating the potential for a short-term counter-trend rebound.
Although investing in Bitcoin has become more challenging in the current environment, 10x Research says opportunities still exist for disciplined traders who can accurately predict macro events and adapt to the changing Bitcoin market structure.
Bitcoin once topped $58,000
In terms of currency prices, BTC has indeed continued to rebound since yesterday. It once rose to US$58,135 early this morning (10th). It has fallen back to US$56,814 at the time of writing, and the increase in the past 24 hours has narrowed to 3.24%.
