Bitcoin (BTC), the top cryptocurrency, has seen a significant drop, wiping out the gains made after the recent US Federal Reserve’s (Fed) interest rate cut.
After reaching nearly $118,000—just 5% short of its all-time high—the market has encountered fresh uncertainty. Despite this decline, experts remain optimistic about Bitcoin’s long-term potential, particularly as September 21 nears, a date considered crucial for Bitcoin’s price movement.
Could September 21 Signal The Beginning Of A New Bull Run?
Market analyst Timothy Peterson points out that historically, Bitcoin has finished the year higher 70% of the time after September 21, with a median increase surpassing 50%. He refers to this date as “Bitcoin Bottom Day,” indicating a high likelihood of price increases.
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Peterson also highlights that two of the three historical downturns of Bitcoin occurred during established bear markets in 2018 and 2022, scenarios that do not represent the current market environment. This leads him to estimate a nearly 90% chance of a price increase this year.
Moreover, Bitcoin’s historical data suggests a near-perfect chance of retaining its gains six months after September 21. Peterson projects at least a 70% probability that Bitcoin will not fall below the $100,000 threshold again.
Analysts Warn Of A Potential ‘Sell the News’ Phase For Bitcoin
Ryan Lee, chief analyst at cryptocurrency exchange Bitget, notes the recent 25-basis-point rate cut by the Fed as a contributing factor that initially raised Bitcoin’s price, momentarily surpassing $117,000. This cut marks the first in nine months, indicating greater liquidity in the market.
However, Lee warns that the median forecast of just 50 basis points in total cuts for the year might dampen some of the enthusiasm, potentially introducing volatility as traders adapt their strategies.
Historically, Bitcoin has seen a drop of 5% to 8% following rate cuts before continuing its upward trend, hinting at a possible “sell the news” period in the days ahead.
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Despite these fluctuations, Lee maintains a positive outlook on the macroeconomic landscape, arguing that falling yields on money-market funds (MMFs) are likely to channel capital toward alternative investments like cryptocurrencies.
He underscores Bitcoin’s position as a hedge in this risk-on environment, especially as around $7.2 trillion is held in cash-equivalent assets.
Looking forward, Lee anticipates that the cryptocurrency may undergo consolidation in the short term before aiming for price levels between $123,000 and $150,000, assuming further rate cuts occur.
Analysts at Bitfinex share an optimistic perspective, forecasting that with three expected rate cuts by year-end and steady inflows into exchange-traded funds (ETFs), Bitcoin could reach between $125,000 and $135,000 by the close of the year.
Nevertheless, they also caution that if inflation or economic growth statistics impede the Fed’s ability to implement further cuts, Bitcoin may settle within the $110,000 to $115,000 range, bolstered by institutional participation and ETF assets providing a robust support level.
Featured image from DALL-E, chart from TradingView.com
