Bitcoin and altcoins may crash as top trader issues Fed warning

Bitcoin and altcoin prices could be at risk of further downside as a top trader warns that the Federal Reserve may be about to err on monetary policy. 

Bitcoin (BTC) price crashed to $113,000 today, Aug. 19, its lowest level in over a week, and 8.60% from its highest point this year. Other altcoins, including popular names like Ethereum (ETH), Solana (SOL), and Sui (SUI), also plunged.

Top trader warns about Fed cuts

One reason why Bitcoin and altcoins surged recently was the rising odds that the Federal Reserve would cut interest rates. Polymarket odds have remained above 71%, while the CME FedWatch tool remains at 85%.  

Odds of a Fed cut rose after the U.S. published weak nonfarm payrolls data earlier this month. The report showed that the nonfarm payrolls increased by just 73,000 in July, while the unemployment rate rose to 4.2%.

These odds then jumped after the headline consumer price index data remained unchanged at 2.7% in July. Wall Street analysts were expecting the report to show that the consumer price index jumped to 2.8% during the month. The core producer price index soared to 3.6% in July.

Still, Sven Henrich, a popular trader, has warned that the Fed is about to err by cutting interest rates. He pointed to core inflation, which has been rising, reaching 3.1% in July. He also expects that the figure will continue rising as the tariff effects start to manifest.

Henrich’s statement that the Fed should not cut rates came a few days before Jerome Powell delivers his statement at the annual Jackson Hole Symposium in Wyoming. 

In previous statements, Powell has maintained that the Fed would remain data-dependent when determining when to cut rates.

Recent data shows that the U.S. could be in stagflation, which is characterized by high inflation and weak economic growth, meaning that the Fed will need to choose sides.

It may opt to cut rates to boost the economy and risk high inflation, or maintain high rates and risk a recession. In a recent statement, Moody’s Mark Zandi warned that recession risks were high, arguing that some key sectors were already in one.

Bitcoin price risky pattern points to a crash

The weekly chart shows that Bitcoin’s price could be on the cusp of a sell-off that could impact altcoins. It has formed a giant rising wedge pattern whose two lines are about to converge. A bearish breakout happens when this convergence is about to occur.

Bitcoin’s price has also formed a bearish divergence pattern as the Relative Strength Index and the MACD have continued falling. If this happens, the coin may crash to below $100,000. Such a move would lead to more downside among altcoins.