Analysts remain divided on Q4 outlook despite Bitcoin rally following rate cuts

Bitcoin (BTC) is up 5.4% over the past seven days, fueled by the US Federal Reserve’s 50 basis point interest rate cut. However, industry analysts are still divided on the direction Bitcoin will take in the coming weeks of the fourth quarter.

MV Global partner Tom Dunleavy believes the current macroeconomic landscape is a “perfect setup” for risk assets, such as crypto. He noted that the majority of signals from the U.S. economy are neutral to expansionary, the opposite of a recession.

Bullish sentiment

Dunleavy also highlighted that markets are already pricing 250 basis point cuts to the US interest rate. He added that the aggressive cuts, coupled with the expected 18% earnings growth for the next 12 months, is a phenomenon “never seen before.”

Meanwhile, VanEck head of digital assets Matthew Sigel said the US Congress’ recent stopgap spending bill, which proposes to keep the federal government running for the fourth quarter, will be “bullish” for Bitcoin since it directly means there will be a “lack of meaningful fiscal reform” in the next three months.

He added that if the bill goes through, it would potentially reduce “downside volatility.”

Meanwhile, Bitget Research chief analyst Ryan Lee said the imrpoving macro conditions, sustained accumulation by MicroStrategy, and the return of inflows to spot Bitcoin exchange-traded funds (ETF) are bullish signs.

However, he also cautioned that the Fed’s rate cut led to a high level of volatility in the market and any bearish macro development could drive prices back to the $58,000 level.

Cautious assessments

However, some in the industry believe that Bitcoin will remain subdued over the coming weeks since it has been trading in a downtrend channel since March.

Some analysts continue to hold a more conservative sentiment and believe prices are more likely to be influenced by upcoming macro events amid this period of risk and uncertainty.

Nansen principal analyst Aurelie Bathere stated in a Sept. 23 report that the positive data from the US economy shows resilient growth, which has fueled the current rally registered by risk assets.

However, Barthere noted that there is still room for further downside movements. She explained that the vulnerability stems from the expensive cost of US equities, which register a forward price-to-earnings ratio of over 20x. Forward price-to-earnings is the relation between the current price for a stock and its expected earnings per share.

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