- Financial experts predict increased volatility in US stock markets, which could impact Bitcoin due to its historical correlation with stocks.
- The Federal Reserve’s decision on interest rates in September is a key factor to watch, as it could influence the direction of the markets, including Bitcoin.
Uncertainty looms over the US financial markets, with financial executives anticipating increased volatility in the coming weeks. This situation could have a significant impact on Bitcoin, which has historically shown a high correlation with the traditional stock market.
The rise in unemployment in the United States has fueled fears of a possible recession, leading investors to be attentive to upcoming economic movements and decisions by the Federal Reserve (Fed). The Fed is expected to cut interest rates in September, but the magnitude of this cut and its impact on the economy remain uncertain.
Brooke May, managing partner at Evans May Wealth, warns that
“if the Fed drastically cuts rates because the economy is slowing down, that’s not historically good for stock returns.”
May also expects
“more volatility”
and
“wouldn’t be surprised to see further declines in stocks in the coming weeks.”
Thomas Urano, co-chief investment officer and managing director at Sage Advisory, shares this cautious view. Urano points out that
“if the data continues to weaken, that context will disappoint equity investors and lead to larger swings.”
However, Urano also believes that
“we are at an inflection point where what had been bad economic news is now perceived as good news, as it would be a catalyst to force the Fed to change course.”
The Fed’s Decision: A Turning Point for the Markets
The Fed’s decision on interest rates in September will be a crucial moment for the financial markets, including Bitcoin. Investors will be watching for any signals about the Fed’s future monetary policy and its assessment of the health of the US economy.
If the Fed decides to cut interest rates aggressively, this could be interpreted as a sign that the economy is weakening, which could trigger increased volatility in the markets. On the other hand, if the Fed keeps interest rates unchanged or reduces them only slightly, this could indicate that the economy is in better shape than feared, which could boost a rebound in the markets.
In this uncertain context, Bitcoin finds itself at a crossroads. If investors perceive Bitcoin as a risk asset, its price could fall along with stocks in the event of increased market volatility. However, some experts, such as the investment firm Grayscale, believe that Bitcoin could benefit even in a recession scenario.
According to Grayscale, Bitcoin‘s decentralized and limited issuance, which allows it to be an anti-inflationary and censorship-resistant asset, could drive its price up even in a difficult economic environment. In fact, Grayscale predicts that Bitcoin will reach new all-time highs in its price this year.
The future of Bitcoin in the coming months will largely depend on the evolution of the financial markets and the decisions of the Federal Reserve. While uncertainty persists, there is also the possibility that Bitcoin will emerge as a safe haven in times of volatility, consolidating its position as a leading digital asset.
