A 50 basis point rate cut seems to be a response to the crisis? The outlook for Bitcoin is probably not good

On September 19th, as the Federal Reserve cut interest rates by 50 basis points, Bitcoin attempted to convert $62,000 into a support level.

This marks the third time in Federal Reserve history that a 50 basis point rate cut has initiated an easing cycle, pushing Bitcoin to a range high of $62,600. This change led to the forced liquidation of short positions in Bitcoin across multiple exchanges. According to monitoring resource CoinGlass, the total liquidation amount reached $128 million within the 24 hours at the time of writing.

CoinGlass then reminded its followers on the X social platform: "Now we need to reduce leverage or take profits," warning them not to be "too aggressive."

Previously, Cointelegraph reported that if the Federal Reserve cut rates by 50 basis points, the price of Bitcoin could reach $64,000. However, despite bullish efforts, this prediction did not materialize due to strong resistance above. Renowned trader Jelle stated on X:

"Bitcoin is slowly digesting the resistance level. Once it breaks $62,500, the market outlook will be more optimistic, and stop-loss positions above $65,000 will no longer be safe. The end of September will be very interesting."

Meanwhile, the US Dollar Index (DXY) experienced significant volatility after the rate cut, first rising and then giving back gains to return to previous support levels. Renowned trader Aksel Kibar's latest DXY analysis on X pointed out: "(The USD) is on the edge of support. If it breaks below support, it could quickly drop to 96."

Former CEO of BitMEX, Arthur Hayes, shifted focus to the Bank of Japan's interest rate decision to be announced on September 20th. He implied that the strength of the Japanese Yen would impact Bitcoin's price performance.

Nevertheless, trading resource The Kobeissi Letter issued a clear warning to risk asset traders. While the rate cut seems to increase liquidity, historically, easing cycles starting with a 50 basis point cut have eventually led to declines in the US stock market.

In a post on X, Kobeissi reviewed previous easing cycles: "In 2001, the market dropped by 31% two years later; and in 2007, the market dropped by 26% two years later. These were major crises." Kobeissi also questioned the contradiction between the Federal Reserve's optimistic information and the extent of its policy easing:

"If the Federal Reserve has always started easing cycles with a 50 basis point cut in past crises, why is it also starting with 50 basis points this time?... The Federal Reserve continues to claim a strong economy and expects a 'soft landing.' But its policy decisions seem more like crisis responses. Something doesn't quite add up."

According to data from CME Group's FedWatch tool, the likelihood of another 50 basis point rate cut at the next Federal Reserve meeting on November 7th is lower than the likelihood of a 25 basis point cut