Experts from 10X Research believe that a 50 basis point (0.5%) cut in the interest rate by the US Federal Reserve during the meeting on September 17-18 could have negative repercussions for the cryptocurrency market. According to the firm's analysts, this may potentially trigger increased market anxiety and lead to a decrease in the prices of high-risk assets, including Bitcoin.
As stated in the 10X Research report, a rate cut typically signals positive developments for the market; however, this time it might produce the opposite effect. A significant change (by 50 basis points) could indicate serious economic troubles, prompting investors to steer clear of high-risk assets like Bitcoin.
“While a 50 basis point reduction might signal deeper concerns in the market, the main goal of the Fed is to mitigate economic risks rather than to manage market reactions,” noted Marcus Tilleen, founder of 10X Research, in a letter to clients.
However, the likelihood of substantial changes remains quite low. The FedWatch tool from the Chicago Mercantile Exchange indicates a 29% risk.
“The chance of a 50 basis point cut stands at just 29%, contrasting with our forecasts and the overall market sentiment,” emphasized Tilleen.
Tilleen's viewpoint is supported by experts from the traditional market.
“The Fed doesn't want to initiate with a 50 basis point cut, because, quite frankly, the economy doesn't need panic at this stage,” remarked macro trader Craig Shapiro.
Meanwhile, the crypto community, based on data from Polymarket 
decentralized prediction market platform, is also optimistic regarding a modest rate cut — only 25 basis points are anticipated. If user predictions hold true, Bitcoin's price could rise.
For instance, on July 31, 2024, when the Fed decided to maintain the interest rate, it led to a decline in Bitcoin's value and a significant crash in the cryptocurrency market in August. A further substantial rate reduction could trigger a new wave of volatility.
Interest rate is the percentage established by the central bank for lending to commercial banks. Alteration of this rate is a primary tool for controlling the economy.
Interest rates are typically adjusted in small increments measured in basis points. One basis point equals one-hundredth of a percent (0.01%). Generally, central banks, like the US Federal Reserve, change the rate by 25 basis points at a time. However, in urgent situations, they may take more drastic measures.
For example, in 2022, the Fed raised rates multiple times by 50 or 75 basis points to quickly combat inflation. This created heightened fear in financial markets, as such abrupt actions reflected serious economic challenges.
Source: 10X Research, X, FedWatch, Polymarket
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