The long-awaited September Fed meeting is set to take place this week between September 17 and 18. The US Federal Reserve is expected to announce an interest rate cut at its press conference on September 18. Current market odds show that the Fed will likely cut rates by 25 or 50 basis points (bps). Any potential rate cut is expected to significantly impact Bitcoin and other crypto assets.
The Chances Of An Interest Rate Cut Ahead Of September Fed Meeting
The CME FedWatch data shows a 59% chance of a 50 bps Fed rate cut and a 41% chance of a 25 bps rate cut at the September Fed meeting. The latest Polymarket data also shows a 55% chance of a 50 bps rate cut and a 43% chance of a 25 bps rate cut.
Until last week, the odds of the Fed cutting interest rates by 25 bps were higher than 50 bps. However, the release of the PPI inflation data showed that the US economy has improved, prompting the possibility of higher rate cuts.
This interest rate cut will be the first from the Fed since March 2020. The crypto community has monitored this development for a while, as this macro event will impact Bitcoin price and the broader crypto market. Based on historical trends, BTC tends to benefit from a rate cut. The March 2020 rate cut kickstarted the 2021 bull run when the flagship crypto rose to around $69,000.
What To Expect After The Fed Rate Cut
Crypto trader and analyst Doctor Profit has provided insights into what to expect from Bitcoin price if an interest rate cut occurs following the September Fed meeting. The analyst stated that BTC will likely face downward pressure. He remarked that the Israel-Lebanon conflict could also add fear to the market, causing the BTC price to decline further.
As such, Doctor Profit warned market participants to apply proper risk management as there will likely be heightened volatility after any rate cuts. He said the priority during these volatile days is to protect one’s capital while playing the waiting game.
Meanwhile, the analyst revealed that he remains bullish on Bitcoin’s mid and long-term outlook following this macro event. In the mid-term, he predicts that the “inevitable flood of money printing” will silence any panic in the market.
He stated that this Quantitative easing (QE) would boost the already-growing liquidity in the crypto market with the rise in the amount of USDT issued on-chain. Doctor Profit also alluded to the liquidity injected through FTX creditors, who could begin receiving repayments from Q4 of this year.
The crypto analyst reaffirmed that the money printers will come alive once Fed Chair Jerome Powell and the committee are done with the interest rate cuts. Citi analysts predicted a 1.25% Fed rate cut this year after the release of the August CPI inflation data, meaning there will likely be more rate cuts after the September Fed meeting.
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