FBS analysts indicate a potential downturn for Bitcoin, particularly relevant to Kenyan investors, as the market braces for the expected Federal Reserve’s key rate cut in 2024.
This development suggests an end to the bullish trend in BTCUSD, given the influence of rate hikes on risk assets like Bitcoin, which are popular among Kenyan cryptocurrency enthusiasts.
Bitcoin
The Federal Reserve’s key rate, crucial in setting the benchmark for interbank lending rates, significantly impacts the global financial market, including cryptocurrencies. Kenyan market observers have noted a pattern where peaks in the Federal Reserve’s key rate correlate with downturns in risk assets, Bitcoin included.
Analyzing Bitcoin’s performance from 2017 to 2020, FBS analysts highlight a 370% increase to 13,000 USD or the 61.8 Fibonacci level in early 2019, a response to anticipated rate cuts. However, as rates began to fall, Bitcoin entered a bearish phase, impacting Kenyan investors who are increasingly engaging in cryptocurrency trading.
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From 2021 to 2024, the Federal Reserve raised interest rates to tackle inflation. While such hikes usually suppress demand for risk assets, Bitcoin’s value rose, contrary to expectations. The trend shifted when the Fed paused rate hikes in September 2023, leading to market speculation about an impending rate decrease.
FBS analysts observe that Bitcoin’s trajectory in 2024 mirrors its 2017-2020 behavior. Notably, BTCUSD reached the 61.8 Fibonacci level at around 49,000 USD before declining, aligned with market predictions of the Federal Reserve’s rate cut.
Drawing from these patterns, FBS analysts forecast a drop in Bitcoin’s value towards 36,000 USD after the Fed’s first rate cut in 2024. If BTCUSD breaks this support, it could further fall to 31,000 USD and potentially 25,000 USD.
This outlook highlights a critical market cycle aspect: while rate cuts are expected to boost risky assets like Bitcoin, they often occur amid economic stagnation and slow growth. This can lead to panic selling and the offloading of risk assets, a situation Kenyan Bitcoin investors should closely monitor.
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