The financial market is bracing for a high-intensity month for Bitcoin. The near certainty of a 25 basis point cut by the U.S. Federal Reserve has sent expectations soaring. According to data from the Polymarket platform, the probability exceeds 90%, an event that already seems to be priced into the asset’s value.
Currently, the price Bitcoin is trading in the $116,000 to $117,000 range. This price level already reflects part of the upcoming monetary stimulus. However, economist Timothy Peterson anticipates that the Fed’s final decision could substantially boost Bitcoin and altcoins. The historical record of the market’s reaction after the first rate cut is mixed. On one hand, average gains of 50% have been recorded in the following six months. Nevertheless, there are also precedents for initial drops, such as the 39% plunge seen in March 2020 before a strong recovery began. This duality creates an asymmetric risk environment.
Derivatives and liquidity: the catalysts for the next move
The decision on interest rates will directly impact global liquidity and risk appetite. A cut typically favors assets like Bitcoin, but the derivatives market adds a layer of complexity. Professional traders are, in fact, showing a defensive and cautious stance, reducing their leverage in the face of potential volatility. The global economy is watching closely, and a stimulus could increase flows into Bitcoin ETFs, although the relationship is not automatic. Some technical analysts are even considering a prior correction towards $104,000 before a sustained rally.
The derivatives market often amplifies spot price movements. Therefore, an increase in liquidity could generate sharp swings. Furthermore, external factors like a potential U.S. government shutdown could delay key economic data. This would add an extra layer of uncertainty and volatility to the market. Investors will need to manage risk very carefully in this scenario.
This upcoming 25 basis point cut is the milestone everyone is waiting for. The reaction of investment flows and the behavior of the derivatives market will be crucial. These factors will determine whether the coming weeks are confirmed as a truly dynamic period for the leading digital asset. Leverage management will be the key for traders.
