Fed Rate Cut Warning Could Trigger Bitcoin, Altcoin Crash
Bitcoin crash to $113,000 marks its lowest level in over a week, an 8.6% drop from its YTD high. Altcoin prices also slid: Ethereum fell 4.3%, Solana 3.5% and Sui 3.9%. This downturn follows speculation the Federal Reserve may delay a rate cut. Odds of a September Fed rate cut had exceeded 70%, driven by weak July payrolls and stable 2.7% CPI. However, trader Sven Henrich warns the Fed should not ease policy due to rising core inflation, which hit 3.1% in July and may climb further. The warning comes ahead of Fed Chair Powell’s Jackson Hole address. Technical indicators reveal a bearish rising wedge on Bitcoin’s weekly chart, with diverging RSI and MACD. A break below $100,000 could deepen the crypto market sell-off.
Bearish
Market sentiment has turned bearish as the warning from Sven Henrich suggests the Fed will maintain higher rates amid rising core inflation, dampening risk appetite. Historically, delays in rate cuts have coincided with crypto downturns, such as mid-2022 when Fed tightening led to a deep crypto bear market. The bearish rising wedge pattern on Bitcoin’s chart and divergences in RSI and MACD signal technical weakness. In the short term, traders may reduce exposure, driving further declines. In the long term, if inflation remains above target and the Fed stays hawkish, Bitcoin and altcoins could face prolonged pressure, delaying any sustainable rally. However, a sudden shift in Fed policy or positive inflation surprise could reverse the trend.