How are Bitcoin and Interest Rates Correlated – What Will Happen to BTC Price
For the last few days, economists have been speculating on the Fed reserve decision and the possible impact on cryptocurrencies.
Lowering the interest rate usually increases investment activities as institutions and individuals become more financially capable of seeking risky and high-yielding assets.
BTC prices started surging a few days before the Fed cuts. Is there a relation between these two events? How are the Bitcoin and interest rates correlated? Let’s find out.
Understanding The Correlation Between Bitcoin and Interest Rates
Institutions and individuals finance their crypto investments using personal funds, savings, or loans. Investors can take credits to secure high-return investments, which offset the loan amount and its associated interest.
It is difficult to track the direct relationship between Interest rates and Bitcoin. However, in most cases, when the interest rates decrease, the crypto price increases.
In other words, when corporations and traders receive better credits, they are more motivated to expand investments to increase production and savings and find more ways to generate income. Investing in Bitcoin is one of these practices.
Therefore, the negative interest rates and Bitcoin can be seen in today’s coin price, as BTC hiked in the past week, a few days. At the same time, the speculations were optimistic about the Federal Bank’s decision, suggesting that a decrease is coming on the way, boasting interest in Bitcoin.
The Federal Interest Rate Cut
On September 18th, the Federal Open Market Committee conducted its scheduled meeting, making economic decisions based on specific indicators like unemployment rate and inflation.
Many attribute the interest rate cut to the massively improving inflation figures and the unalarming unemployment changes.
Bitcoin Price Prediction
As the BTC price reaches over $60,000, let’s analyze the market price and draw future predictions. Will the Bitcoin surge continue?
We use the exponential moving average to predict future short- and long-term price trends. First, we implement the EMA indicator on 12-day and 24-day timelines.
We see how the Bitcoin price started moving upward after the 1st week of September, crossing above both EMA lines. At the same time, the EMA lines were lying under the market price and pointing up, suggesting a possible solid price uptrend.
Looking at the long-term trends, we see the market price going above the EMA indicators just on the Fed decision date on September 18th, reflecting the relationship between Bitcoin and Fed interest rates.
The short-term 50-day EMA line lies under the long-term EMA and market price, with a slight upward slope. This movement suggests a possible bullish movement. However, it is not likely to be very significant before a price correction happens.
Conclusion
Market experts and economists have anticipated the Federal interest rate cut. The negative relationship between Bitcoin and interest rates is evident as a surging coin price accompanied the rate cut.
However, we predict this upward trend will last a few days as investors fill their positions and buy BTC, which can pick up the price towards the $63k-64k region before the correction.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Investing in cryptocurrencies, including meme coins, carries ingrained risks, and individuals should conduct their own research before making any investment decisions.
