As a researcher with experience in financial markets and cryptocurrencies, I find RamenPanda’s perspective on the potential impact of U.S. interest rate cuts on Bitcoin intriguing. Based on historical precedents during times of economic crisis, such as the one in 2008, there have been concerns about a sharp correction in the stock market and cryptocurrencies like Bitcoin following any rate cuts. However, RamenPanda presents a compelling argument that this might not be the case for the current scenario.
The U.S. central bank won’t make any harsh adjustments to interest rates after any reductions in September or November.
Analyst RamenPanda shared their insights and made this forecast in a detailed write-up published on X on June 27.
During economic downturns, like the one in 2008, the Federal Reserve reduces interest rates to bolster the economy. Contrary to this intention, the stock market often experiences a decline after such reductions.
It’s widely anticipated that the US Federal Reserve will reduce interest rates, possibly in September or November. Some investors express concern over potential significant declines in US stocks and Bitcoin ($BTC) in the crypto market due to past parallels with the financial crisis of 2008.
My take is, NO, THERE WILL BE NO SHARP CORRECTION. Here is why
To put it simply, there are two…
— RamenPanda (@IamRamenPanda) June 27, 2024
Bitcoin Boom Following Rate Cuts
The Fed occasionally lowers rates when the economy is in good shape but believes current rates are excessive, which are now hovering around 5.25% to 5.5% for over a year.
“This, uncommon scenario, is the main reason why the Fed will cut interest rates this year.”
The reduction in interest rates by the Federal Reserve in 1995 ignited a surge in investing, particularly in internet-related assets, which eventually culminated in the dot-com bubble. In a similar vein, there could be an explosive increase in investment for crypto and artificial intelligence assets in the current year, as per his viewpoint.
As an analyst, I believe the year 2024 shares more resemblance with 1995 than with 2008. Consequently, get ready for the bursting of the AI and Bitcoin bubbles!
According to recent findings, Bitcoin’s price fluctuations often mirror the trends in U.S. inflation data or Consumer Price Index (CPI) reports. These indicators significantly impact Federal Reserve (Fed) policies and their subsequent choices regarding interest rate adjustments.
Analyst Willy Woo made the point earlier this week that investments like gold, stocks, and Bitcoin can serve as effective hedges against inflation (CPI) and monetary devaluation.
While the Fed likes to report to you CPI Inflation (yellow line).
What you really need to beat is CPI + monetary debasement (while line).
It’s around 8% normally.
Gold keeps you on par.
SP500 will beat it by 3%.#Bitcoin will beat it by 20%-70%.
— Willy Woo (@woonomic) June 24, 2024
Not So Fast…
Despite this, there’s a possibility that BTC may experience further decreases in value before experiencing any substantial growth. As per Markus Thielen, the head of research at 10x Research, Bitcoin might drop down to a price of $55,000 during this market correction.
As a researcher studying the bitcoin market, I’ve observed that the weekly and monthly reversal indicators signaled a potential correction on June 28. This week, bitcoin experienced a significant drop of approximately 19% from its all-time high, falling below $60,000. However, it has not yet reached the average correction for this cycle, which stands around 22%. If we were to see this deeper correction, bitcoin would retreat to around $57,500.
Should Thielen’s forecast be accurate, the required adjustment would amount to a more significant 25%. If, however, the price drops to $50,000, the correction could reach an even greater depth of 32%.
#BTC
The recent pullback in Bitcoin’s price approached the typical correction of around 22%, which is an average occurrence throughout its entire market cycle. $BTC #Crypto #Bitcoin
— Rekt Capital (@rektcapital) June 27, 2024
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2024-06-28 18:17