Bitcoin set to rise with possible Fed rate cut up to 50 points

Goldman Sachs’ chief economist Jan Hatzius predicts a potential Federal Reserve rate cut of 25 to 50 basis points, which could influence Bitcoin's (CRYPTO:BTC) price. 

Hatzius noted that "I wouldn’t rule out 50 basis points, but 25 basis points strikes me as more likely," highlighting that the current U.S. federal funds rate is at its highest among the G10 countries. 

With the U.S. showing more progress on inflation control than other G10 nations, the rationale for a rate cut is gaining traction.

Bitcoin's performance has diverged from traditional markets recently. 

Over the past 30 days ending September 13, Bitcoin fell by 6%, while the Nasdaq Composite rose by 3.7%, and the S&P 500 gained 4%. 

The crypto market’s downturn contrasts with gains in the stock market, prompting questions about the future of Bitcoin's price.

Historically, lower interest rates have correlated with strong Bitcoin rallies. 

For instance, when rates dropped to zero in 2020, Bitcoin’s price surged nearly eightfold to new highs. 

As the Federal Reserve began increasing rates again, Bitcoin's price stabilised at around twice its pre-pandemic level. 

However, when the Fed stopped raising rates in late 2023, Bitcoin experienced another significant price surge.

The possibility of a rate cut raises questions about whether Bitcoin will see another rally. 

Lower rates generally lead to more liquidity in markets, benefiting both stocks and Bitcoin's decentralised economy. 

Analysts argue that if a rate cut materialises, it could set the stage for another Bitcoin surge, particularly in light of past patterns where reduced rates aligned with significant Bitcoin gains.

Additionally, the anticipation around Bitcoin's next halving, which occurred on April 19, continues to fuel speculation. 

Historically, Bitcoin rallies have peaked 12 to 18 months after each halving event, making the potential rate cut a key factor to watch for the cryptocurrency's future trajectory.

At the time of reporting, the Bitcoin (BTC) price was $59,128.25.