Yahya 
Portfolio manager Justin Elliot of Caldwell Investment Management believes the United States Federal Reserve may not decrease interest rates as much as some market players expect. The larger bitcoin market is still hopeful for a possible September rate reduction, however.
Elliot voiced worries in an August 14 Bloomberg interview about the market maybe exaggerating the possibility of significant rate reduction before year’s end. Elliot said, “There is little to support such aggressive expectations; the market pricing in 100 basis points of cuts by the end of the year is a potential risk and it is potentially getting ahead of itself.”
Elliot underlined that while inflation seems to be moving in the correct way, the U.S. economy is still doing really well as retail sales remain robust. He advised against excessively optimistic views on the state of the economy, implying that even the most recent, more cautious economic projections may still be too positive.
The portfolio manager also underlined that many Bitcoin investors feel are required for the asset to exceed its present all-time high of $73,679 are rate cuts predicted by some, may not materialize. For Bitcoin, interest rates are vital as higher rates usually make safer investments like bonds more appealing, thereby perhaps pulling investors away from riskier assets like Bitcoin.
Elliot’s comments followed the publication of the July Consumer Price Index (CPI) statistics by the U.S. Bureau of Labor Statistics (BLS), which indicated annualized price rises for consumers of 2.9% — the slowest rate increase since 2021. After the news, Bitcoin’s price dropped almost 3%, falling below the critical $60,000 mark.
Head of strategy and business development at 21Shares Eliézer Ndinga said that expectations for a more dovish rate reduction being shattered were probably responsible for Bitcoin’s fall. Notwithstanding this, the larger crypto sector is still hoping for a September rate decrease, which has been much discussed for months.
Head of research at ETC Group Andre Dragosch said that U.S. inflation is projected to keep slowing down, which would support Fed rate reduction arguments. Likewise, Michael van de Poppe, creator of MN Trading, pointed out that the favorable CPI numbers raise the possibility of a rate drop, which can thus influence the price movement of Bitcoin.
Still wary, crypto investors hope that fresh economic data would cause the Federal Reserve to cut rates sooner rather than later, therefore bolstering the bitcoin market.
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