Analysts Caution 20% Bitcoin Decline as US Rate Cut Fuels Recession Fears

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Harvey Hunter is a Junior Content Creator at Cryptonews.com. With a background in Computer Science, IT, and Mathematics, he seamlessly transitioned from tech geek to crypto journalist.

A long-awaited interest rate cut by the United States Federal Reserve could have an unexpected impact on Bitcoin, potentially driving its price down, according to analysts.

In a September 2nd report from Bitfinex, analysts warned that a US rate cut could present a “challenging time” for Bitcoin traders.

While a 25 basis point cut is seen as the more favorable outcome, possibly leading to “lead to long-term price appreciation for Bitcoin as liquidity increases and recession fears ease,” the report cautioned that a more aggressive cut could have the opposite effect.

A 50 basis point rate cut could potentially trigger a correction, pushing Bitcoin deeper into its recent slump as “recession concerns escalate.” The analysts added:

“If we were to speculate, we would caution to expect a 15-20 percent decline when rates are cut this month, with a bottom of $40-50k for BTC”

Recession concerns gained traction in early August when the Sahm Rule Recession Indicator, which tracks economic downturns, jumped to 0.53 from 0.43 following weak U.S. jobs data, signaling a warning of a looming recession.

As the September 18th Federal Open Market Committee (FOMC) meeting approaches, the majority of traders on Polymarket are betting on a rate cut by the U.S. Federal Reserve.

Data from the decentralized betting platform shows that 69% of traders expect a 25 basis point cut, reflecting a strong consensus around this outcome. Meanwhile, 27% anticipate a more substantial 50 basis point cut, while only 3% believe the rate will remain unchanged.

Odds of a 50+ bps rate cut