Crypto analyst Benjamin Cowen has issued a warning about potential negative impacts on Bitcoin (BTC) and the S&P 500 (SPX) due to possible Federal Reserve interest rate cuts, contradicting common beliefs that rate cuts lead to improved performance for risk assets.
Today, Cowen drew attention to historical patterns suggesting both BTC and the SPX could likely face a downward trend following a rate cut. He referenced the period from 2016 to 2018 when rate hikes coincided with rises in both markets.
He noted that the Bitcoin market bottomed out when the Fed paused rates in December 2018, followed by a market peak before the first rate cut in July 2019. Cowen also pointed out similar trends with the S&P 500, which experienced market peaks around times of rate cuts in 2000 and 2007.
Challenging conventional wisdom, Cowen argued that markets typically worsen once rate cuts start. He predicts that both BTC and SPX will only rally once the Federal Reserve nears the end of its rate-cutting process, as initial cuts often fail to sufficiently stimulate a tight economy.
Despite Cowen's warnings, positive Bitcoin price predictions have emerged in recent weeks, largely influenced by the acceptance of BTC ETF. Cathie Wood from ARK Invest holds a contrasting view to Cowen's, predicting Bitcoin will surge as soon as the Fed is required to pivot.
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