Bitcoin shows high volatility as US rate cut speculation grows

Bitcoin (CRYPTO:BTC) and the broader cryptocurrency market are experiencing volatility amid speculations of a potential interest rate cut by the U.S. Federal Reserve.

Historically, September has been a challenging month for Bitcoin, and this year appears no different.

As of early September, Bitcoin is down by 6.3%, following a 7.5% decline in August.

This trend is consistent with Bitcoin’s historical performance, as it has fallen in seven of the last twelve Septembers.

Amid these market conditions, Bitcoin’s 30-day volatility has surged to 70%, indicating substantial price fluctuations.

Market participants are closely monitoring the upcoming Federal Open Market Committee (FOMC) meeting on September 17-18, where an interest rate cut is expected.

Federal Reserve Chairman Jerome Powell's recent comments at the Jackson Hole symposium have fueled these speculations, with the U.S. Dollar Index reflecting uncertainty by hovering around 100.

Additionally, the implied volatility (IV) of Bitcoin, a measure of expected future price swings, has seen a sharp rise since the beginning of September.

Short-term options expiries, in particular, have experienced notable increases, signaling potential market stress.

This inverted volatility structure suggests traders are preparing for significant market movements, although the direction remains unclear.

Bitcoin’s trading volume has also surged, nearing $3 trillion, reflecting increased market participation amid uncertainty.

The cryptocurrency market is showing signs of heightened activity as traders anticipate possible impacts from the rate cut decision and other economic factors, such as U.S. inflation data and the upcoming presidential debates.

While some market experts believe a rate cut could boost risk assets like Bitcoin, concerns remain about how a substantial cut might be interpreted.

A larger-than-expected cut could signal deeper economic concerns, potentially triggering a retreat from riskier assets.

At the time of writing, the Bitcoin (BTC) price was $56,664.03.