Bitcoin Falls Below $65K as Fed Maintains Rates, Indicates Possible September Cut

Bitcoin has experienced a decline below a significant price threshold following the United States Federal Reserve’s decision to keep interest rates steady amidst rising tensions in the Middle East.

On July 31, Bitcoin (BTC) fell to $64,549 — its first drop below $65,000 since July 25, as reported by CoinMarketCap. Despite a brief rise to $65,075, the cryptocurrency has not maintained that key level, currently trading at $64,470.

This price fluctuation followed the Federal Open Market Committee’s (FOMC) decision to keep interest rates unchanged at 5.25% to 5.5%, a move widely anticipated by the market.

Jerome Powell, the Fed Chair, remarked that the economy is growing at a “solid pace,” highlighting positive indicators for GDP growth and Private Domestic Final Purchases (PDFP), while noting a slowdown in consumer spending growth as part of their inflation reduction strategy.

“Inflation has significantly decreased from 7% to 2.5%, and we are firmly committed to reducing it to our 2% target to support a robust economy for all,” Powell stated in a speech delivered on July 31.

Prior to this announcement, market analysts expected the FOMC to refrain from adjusting rates until September.

In the meantime, crypto commentator Seth noted that the relative strength index (RSI) for Bitcoin is currently “oversold,” which may indicate a potential buying opportunity.

“The FOMC tends to liquidate retail traders lacking adequate trading knowledge and using excessive leverage,” Seth mentioned in a recent post.

The recent price drop also coincided with reports of the assassination of Ismail Haniyeh, a leader of Hamas, in Tehran. This has raised concerns about escalating conflict in the region, as reported by Reuters.

This isn’t the first instance of Bitcoin’s price reacting negatively to heightened tensions in the Middle East. For example, a similar occurrence took place on April 19 when Iranian media reported explosions at Isfahan airport, leading to a 5.44% drop in Bitcoin’s price.

Market Analysts Forecast Potential September Rate Cut

While Powell has not definitively confirmed a rate cut in September, various analysts are expressing optimism regarding this possibility. According to trading resource The Kobeissi Letter, “The Fed is eagerly anticipating the inflation data over the next two months. A further drop in inflation could pave the way for a September rate cut.”

Mark Zandi, chief economist at Moody’s Analytics, predicts that the forthcoming inflation data could align with the Fed’s expectations, making a September rate reduction likely.

“For the Fed to move forward, the inflation metrics need to cooperate, but all signs indicate a favorable outcome. Global investors are responding positively, with stock prices rising and bond yields decreasing,” Zandi remarked.

Meanwhile, MN Trading’s founder, Michael van de Poppe, believes that Powell’s “dovish outlook” on future monetary policy signals good news for both Bitcoin and altcoins.

This content is for informational purposes only and should not be interpreted as investment advice. It is crucial for individuals to conduct their own research before making investment decisions.