The base interest rate determines the availability of financial loans. And the lower it is, the easier it is to access capital.

As the rate falls, the yield on traditional investment instruments like Treasury bills also falls. Thus, investors have an added incentive to link to more volatile assets for the prospect of higher returns.

Cryptocurrency investors

The US Federal Reserve will make its first rate cut in years on 18 September during the Federal Open Market Committee (FOMC) meeting. And it is this event that will have a positive impact on the performance of various financial markets.

New prediction for Bitcoin

The Fed’s new strategy was announced last week by the head of the agency, Jerome Powell. His comments were quite optimistic, as the Fed chairman clearly signalled the willingness of bankers to change the current policy on the markets. Well, this will traditionally lead to the activation of investors – and cryptocurrency investors in particular.

Prospects for Bitcoin in the coming weeks commented experts QCP Capital. The relevant replica is cited by The Block.

Ahead of next week’s release of the US non-farm payrolls report, we expect volatility in the market to continue its downward trend as the market positions itself in anticipation of a possible Fed rate cut.


As a reminder, the current cycle of base interest rate hikes has been ongoing since March 2022. Since that month, the rate has either increased or remained at the same level. Meanwhile, the overall rate has jumped from a range of 0.25 to 0.5 per cent to the current range of 5.25 to 5.5 per cent.


Bitcoin Volatility Index

Employment and GDP data to be released towards the end of the week will give traders and investors more clarity on the potential scope of a rate cut at the Fed’s next meeting on 18 September.

Market representatives now believe that bankers will implement a minimum cut of 25 basis points – the probability of this is estimated at 70 per cent. However, the prospect of a 50 basis point cut also exists, which means the Fed’s final decision could be anything.

The prospect of a cut in the benchmark interest rate at the next FOMC meeting on 18 September

US non-farm payrolls data in particular could influence the Fed’s decisions on the rate trajectory.

The previous report, released in early August, showed an unexpected rise in the US unemployment rate from 4.1 per cent to 4.3 per cent. This sent markets tumbling amid concerns that the Fed may be late in its rate-cutting efforts.

US Fed Chairman Jerome Powell

Analysts at QCP Capital also noted the impact of the US GDP report on Bitcoin’s price performance. Although this document is likely to have a smaller impact overall – especially if it confirms the prevailing version of the slowdown in the country’s economy.

And while the economy is now showing signs of slowing down, the prospects for a recession are still unclear. However, analysts at Goldman Sachs had the previous day reduced the chance of such a thing happening from 25 per cent to 20 per cent.

Experts of the largest American crypto exchange Coinbase also shared their version of the market forecast.

According to them, Bitcoin’s yield was relatively small compared to the US stock market assets. Moreover, this trend has persisted since early August, when the price of the main cryptocurrency collapsed below $50,000 during a rapid correction.

Cryptocurrency market collapse

On Monday 5 August, the crypto market lost about 367 billion dollars of capitalisation within 24 hours. This drop coincided with a similar correction in equities.

According to a Coinbase report published on Friday, the bottom line is that Bitcoin has failed to outperform stock indices in terms of returns since the beginning of the month. Here’s a rejoinder from experts on the matter.

On a risk-adjusted basis, Bitcoin’s price is currently 0.50 standard deviations below its three-month average compared to the S&P 500, where the index levels are actually 1.41 standard deviations above its three-month average.

In other words, the situation with equities has been noticeably better than with digital assets lately. And the difference in what is happening is more than obvious.

Change in the S&P 500 index

Analysts added that the price of Bitcoin has been unstable lately and has been trading in a fairly narrow range. This is in line with concerns about the lack of a new narrative driving market dynamics. That is, there is now a banal lack of a trend in the market that can create a HYIP in the niche and attract new investors to it.

Bitkion’s price has been struggling to recover since the beginning of August. The lack of new events, as well as the fact that September is a seasonally difficult period for cryptocurrencies, keeps traders away from opening long positions.

According to the expert, this is primarily due to the reduction of inflows into Bitcoin-based exchange-traded funds (ETFs), the excess supply of BTC and the recovery of the U.S. dollar index, which can influence the performance of the crypto market. So for at least a few more weeks, the situation in crypto trading promises to be challenging.


What is happening with crypto in August leaves much to be desired. Still, the beginning of the month brought a massive market crash, after which the market never recovered. In this regard, it is not surprising that experts expect the situation to improve already as the burden on the economy decreases.