10x Research believes that if the Federal Reserve cuts interest rates by 50 basis points (bps) on September 18, the originally bullish liquidity easing cycle may have a negative impact on risk assets including cryptocurrencies.
It is reported that an adjustment of 50 basis points usually indicates the urgency to control inflation and triggers risk aversion sentiment in financial markets. A rate cut of 50 basis points next week could imply heightened concerns about the economy or a sense of lagging behind in dealing with an impending economic slowdown, leading investors to reduce their exposure to risky assets such as Bitcoin (BTC) and stocks.
Markus Thielen, founder of 10x Research, said: "Although a Fed rate cut of 50 basis points might suggest more market worry, the main focus of the Fed will be mitigating economic risks rather than managing market reactions."