Rate cut imminent... Bitcoin rebound 'not so sure'

Even with a rate cut imminent, the market has "already priced it in"

Short-term adjustment possible immediately after the FOMC

This week attention is focused on the U.S. Federal Reserve (Fed)'s interest rate decision. However, despite the high likelihood of a rate cut, forecasts are spreading that Bitcoin (BTC) has limited room for a short-term rebound. The expectation of a rate cut has already been largely priced into the market, and the past pattern of weakness immediately after FOMC meetings is also cited as a burden.

The Fed will hold the FOMC at 4 a.m. on the 11th (KST) to decide the benchmark interest rate. The market predominantly expects a 0.25 percentage point rate cut at this meeting. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the probability of a rate cut reaches 89.4%.

Standard Chartered analyzed that "although major economic data releases are delayed by a federal government shutdown and internal differences of opinion exist, the Fed is likely to ultimately implement a rate cut in December." Kevin Hassett, chairman of the White House Council of Economic Advisers (NEC) and a leading candidate for the next Fed chair, also raised the likelihood of a December rate cut, saying "it's right to further lower rates. Jerome Powell, the Fed chair, would agree with that," increasing the chances of a December rate cut.

However, regardless of whether rates are cut, the prevailing view is that a short-term price rebound for Bitcoin is unlikely. Expectations of a rate cut have already been quickly reflected across the market, weakening price momentum.

On the 8th (local time) Bitcoin traded on the Binance Tether (USDT) market at around 90,100 dollars, down 1.3% from the previous day. Since intraday lows of 80,600 dollars on the 21st of last month, it has continued to trade in a box range between 84,000 and 93,000 dollars, and volatility has also been greatly reduced.

QCP Capital said in a report that "the FOMC rate cut has already been largely priced in," and analyzed that "open interest in Bitcoin and Ethereum has fallen to about half since October, causing market participation funds to exit." A decrease in open interest generally leads to a reduction in price volatility.

Gracy Lin, CEO of OKX Singapore, also saw that a rate cut announcement would be unlikely to boost Bitcoin's short-term volatility. She said, "In a phase where policy signal gaps between central banks are widening, the impact of the rate cut itself is limited," and "rather, unexpected policy changes or external factors are more likely to cause a sharp rebound."

Some warn that a rate cut could instead be a catalyst for a short-term correction. The Fed cut rates by 0.25 percentage points twice in September and October this year, and Bitcoin fell by 7% and 19%, respectively, at those times.

Crypto analyst Ali Martinez said, "Out of seven FOMCs held this year, Bitcoin fell immediately after six of them," and analyzed that "a price pullback due to the 'disappearance of the catalyst'—the rate cut—could occur in this FOMC as well."

Ryan Yoon, co-lead of Tyger Research, also said, "Historically, short-term declines have repeatedly occurred immediately after rate cuts," and judged that "the rate cut is unlikely to trigger an immediate rebound this time either." However, he added, "A rate cut would be positive for improving the liquidity environment and building a long-term uptrend."