A 50 basis point (0.5%) interest rate cut by the US Federal Reserve (Fed) during its September 17-18 meeting could have negative consequences for the crypto market, according to 10X Research. According to the company’s analysts, this will potentially lead to increased market anxiety and cause a decline in the price of high-risk assets, including bitcoin.
According to a report by 10X Research, the Fed’s rate cut, which usually serves as a positive signal for the market, this time could have the opposite effect. The fact is that a significant change (by 50 basis points) may indicate serious economic problems, so investors will seek to avoid high-risk assets such as bitcoin.
«While a 50 basis point cut could signal deeper market concerns, the Fed’s primary goal is to reduce economic risk, not manage market reaction,» said Marcus Tillen, founder of 10X Research, in a letter to clients.
The latest data on the US labor market, released on September 6, confirmed expectations that the Fed would start cutting interest rates. However, the probability of significant changes is rather low. The FedWatch tool of the Chicago Mercantile Exchange shows a 29% probability.
«The probability of a 50-basis point decline is only 29%, which contrasts with our forecasts and the general market sentiment,» Tillen emphasized.
Thielen’s opinion was supported by experts from the traditional market.
«The Fed doesn’t want to start by cutting the discount rate by 50 bps because, frankly, the economy doesn’t need a panic at this stage», said macro trader Craig Shapiro.
At the same time, the crypto community, according to Polymarket 
decentralized prediction marketplace, is also positive about a significant reduction in the Fed’s rate — only 25 basis points are expected. If the users’ prediction comes true, the bitcoin rate could rise.
For example, on July 31, 2024, when the Fed decided not to change the interest rate, it led to a drop in the value of bitcoin and a serious collapse of the cryptocurrency market in August. Further significant rate cuts could trigger a new wave of volatility.
Source: 10X Research, X, FedWatch, Polymarket
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