Bitcoin at Crucial Pivot Point, Here’s Why Fed Can Tilt Balance

The Bitcoin (BTC) price has gained over 2.60% in the last seven days. The development suggests a recovery in price outlook amid a much-strained Q3 trend. However, the expected interest rate cut by the U.S. Federal Reserve might have a significant impact on Bitcoin and other crypto assets.

Fed Reserve interest rate cuts and Bitcoin’s price outlook

As highlighted in a post by Wu Blockchain, the financial market expects the U.S. Fed to start lowering interest rates. An initial 25-basis-point shift is anticipated to lower the interest rate to between 4.0% and 4.25%. The general expectation is that the Fed will carry out six rate cuts between now and 2026.

If this happens, borrowing costs will decline considerably and make money cheaper. In anticipation of this, stocks and other risk investments like tech equities have started to rally on the financial market. The rally comes as investors look forward to the liquidity that the lower interest rates will free up.

However, Jerome Powell, U.S. Federal Reserve Chair, could maintain a more cautious stance toward inflation and not be willing to cut. Such a hawkish disposition might trigger a market sell-off.

Notably, for cryptocurrency assets, despite the broader financial market anticipation, the crypto sector is lagging. Generally, lower interest rates and more liquidity are catalysts for investors to embrace Bitcoin.

Bitcoin price performance and institutional demand

At the moment, Bitcoin prices are not showing significant growth that aligns with broader market activities. 

As of press time, the Bitcoin price is changing hands at $116,199.61, representing a 0.65% increase in the last 24 hours. The coin had previously hit an intraday peak of $117,328.61 before posting a correction.

Despite the correction, trading volume is up by 17.09% at $50.01 billion. This suggests market participants are bullish on the price outlook.

As the crypto community continues to anticipate, institutional interest keeps growing. For instance, Strategy, the business intelligence firm, continues to stash Bitcoin via strategic accumulation. Similarly, Bitcoin exchange-traded funds (ETFs) inflows continue to soar.