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Goldman Sachs: The Fed to Stop Interest Rate Hikes in September, Will Bitcoin Rally?

Goldman Sachs expects no more rate hikes from September 2023 which could serve as a catalyst for the Bitcoin price to rally.
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Goldman Sachs: The Fed to Stop Interest Rate Hikes in September, Will Bitcoin Rally?

As the Fed’s battle with inflation continues, Goldman Sachs analysts expect that FOMC will stop interest rate hikes in the next month of September. However, post this, the interest rates are likely to decline which would be overall positive for the equity, Bitcoin and crypto markets.

So far, the equity market and the broader crypto market have given a strong bounceback in 2023. The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) is up by 31% while the Bitcoin (BTC) price is up by 77% year-to-date.

Goldman Sachs analysts expect the Federal Reserve to start lowering interest rates from June 2024. They also expect quarterly reductions thereafter.

In a note on Sunday, Goldman economists including Jan Hatzius and David Mericle wrote: “The cuts in our forecast are driven by this desire to normalize the funds’ rate from a restrictive level once inflation is closer to target”.

Currently, the Goldman Sachs team is predicting that interest rate reductions will likely start around the middle of 2024. The committee responsible for setting these rates, called the Federal Open Market Committee, is expected to decide not to increase rates next month. By the November meeting, they are likely to agree that the rate at which prices are rising has slowed down enough to avoid the need for any more rate increases. The analysts at Goldman Sachs wrote:

“Normalization is not a particularly urgent motivation for cutting, and for that reason we also see a significant risk that the FOMC will instead hold steady. We are penciling in 25 basis points of cuts per quarter but are uncertain about the pace.”

Bitcoin Price to Rally Post-September?

Over the past few weeks, the Bitcoin price has been hovering just above $29,000 and not finding enough ammunition for further price action. However, Bitcoin whale and retail addresses have continued to accumulate with new Bitcoin network addressing joining.

Bitcoin’s support level of around $29,200 is holding firm, and its technical situation hasn’t shifted. At the moment, BTC is trading without a clear upward or downward trend because it’s struggling to rise beyond $29,600 within the four-hour timeframe.

If Bitcoin manages to break above the $29,600 level in a bullish move, there’s a chance it could climb to around $30,200.If the BTC price manages to overcome the resistance at $30,2000, it could further rally to $30,600 to $31,000.

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Bhushan Akolkar

Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.

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