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BTC Cryptocurrency analyst Sherlock pointed out that the probability of the Federal Reserve raising interest rates next week will rise to about 90%, which may bring huge selling pressure on Bitcoin.
Cryptocurrency analyst Sherlock believes that the Federal Reserve raising interest rates next week The probability has risen to about 90%, which may bring significant selling pressure on Bitcoin (BTC). According to data shared by Sherlock, in just seven days, the probability of the Fed raising interest rates jumped from 58.4% to 86.4%. Responding to this latest development, the analyst reviewed Bitcoin's performance after the Federal Reserve's 20 interest rate hikes since 2015.
Bitcoin prices first rose and then fell on the first day of interest rate hikes
Analysis shows that Bitcoin usually does not experience sharp fluctuations on the day the interest rate decision is announced. In fact, in 11 of the 20 interest rate hikes, Bitcoin closed above the opening price for the day. However, this initial upswing response is often misleading. Of the 11 rising trading days, 10 days have seen Bitcoin prices fall below levels a month later.
Sherlock's data shows that of the 20 interest rate hikes examined, 17 times the bitcoin price was lower after 30 days. In addition, in 19 of these 20 cases, Bitcoin fell to a level below the price on the day the resolution was announced within a month of the announcement. During this period, Bitcoin's median decline was 9.3%. Analysts pointed out that if Bitcoin's current price is around $78,000, a correction of similar magnitude could pull its price down to about $70,700.
Looking back at the historical period when the Federal Reserve launched a new round of monetary tightening, the losses were even more severe. After the first interest rate increase in December 2015, Bitcoin lost 19% in value in 30 days. Although Bitcoin showed some resilience in the early stages of the rate hike cycle that began in March 2022, its largest decline reached 46.3% in the following 90 days.
Sherlock also pointed out that the market is not pricing just a single rate hike. Based on futures market pricing, the probability that interest rates will be at least 50 basis points higher than current levels by December is 72.6%. Therefore, analysts believe that Bitcoin may fluctuate sideways or rise briefly on the day the Fed announced its decision. However, if price behavior during past interest rate hikes is repeated, there is a risk of a significant correction within 30 days after the decision is announced.
This article does not constitute investment advice.
