Bitfinex Report: Bitcoin Bottom May Be Between $40,000 and $50,000

ChainCatcher news, Bitfinex released a report stating, "This month's Federal Reserve interest rate decision is expected to significantly impact Bitcoin's short-term volatility and long-term trend. Since the beginning of August, Bitcoin has risen over 32%, primarily driven by traders' expectations that the Federal Reserve will make dovish statements. A 25 basis point rate cut could mark the beginning of a typical easing cycle, which may lead to a long-term price increase for Bitcoin due to increased liquidity and alleviated recession concerns. On the other hand, a larger 50 basis point cut could cause an immediate spike in Bitcoin's price, but it may be followed by a pullback as recession fears intensify. In the past week, we have seen spot holders reducing risk while speculators in the perpetual contract market attempt to 'buy the dip', and we continue to observe a large number of long open contracts on Bitcoin perpetual contracts.

If we were to make a prediction, we would caution that a 15-20% drop may occur during this month's rate cut, with Bitcoin's bottom potentially between $40,000 and $50,000. This is not an arbitrary figure, but rather based on the fact that the peak return percentage in each cycle typically decreases by about 60-70%, and the average bull market pullback is also decreasing. However, if macroeconomic conditions change, this logic could be easily negated. For traders, these moments are filled with uncertainty.

Historically, September has been a month of high volatility for Bitcoin, with an average return of -4.78%, and a typical peak-to-trough decline of about 24.6%. This volatility, combined with a potential 'sell the news' reaction after the rate cut, could present both risks and opportunities for traders. Meanwhile, the increasing correlation of Bitcoin with traditional risk assets, such as the S&P 500 index, indicates that its price fluctuations will be closely tied to global macroeconomic conditions. Actions by other major central banks, such as the European Central Bank potentially pausing rate hikes amid slowing growth, and the Bank of Japan's cautious stance in a slowly recovering economy, could have ripple effects on global markets and impact digital assets like Bitcoin."