0.50% Fed Rate Cut Spells Trouble for Bitcoin Amid Recession Fears: 10x Research

cryptonews.com:

Harvey Hunter is a Junior Content Creator at Cryptonews.com. With a background in Computer Science, IT, and Mathematics, he seamlessly transitioned from tech geek to crypto journalist.

10x Research cautions an aggressive U.S. Federal Reserve rate cut as a signal of economic worry, not reassurance, weighing over Bitcoin and other risk assets.

In a September 9th note to clients, 10x Research CEO Markus Thielen warned that the supposedly bullish liquidity easing cycle may kick off on a sour note for risk assets.

While a 25 basis point cut is seen as the more favorable outcome, possibly leading to long-term price appreciation for Bitcoin as liquidity increases and recession fears ease, a more aggressive cut could have an adverse effect.

A 50 basis point cut could “signal deeper concerns to the markets,” indicating a lapse in combating the impending economic slowdown. This might cause investors to reduce their exposure to risk assets like Bitcoin.

Something Thielen highlighted as no obstacle to the Fed’s decision, as their “primary focus will be mitigating economic risks rather than managing market reactions.”

While traders currently place the probability of a 50 basis point cut at 29%, according to CME’s fed watch tool, 10x Research cautions this, citing it to contrast their view of the “prevailing consensus.”

Recession concerns gained traction in early August when the Sahm Rule Recession Indicator, which tracks economic downturns, jumped to 0.53 from 0.43 following weak July U.S. jobs data, signaling a warning of a looming recession.

In the wake of the release of August’s weak jobs report, these fears have been exasperated. According to FRED data, the Sahm Rule Recession indicator has jumped higher to 0.57. 10x Research commented:

T