BlackRock Warns of Potential 50% Bitcoin Price Plunge as Crypto Market Prepares

Bitcoin has shown resilience by rebounding from a recent price crash, aligning its movement with stock markets amid anticipation surrounding a significant Federal Reserve announcement. The cryptocurrency has surged back towards the $60,000 mark after briefly dropping to around $50,000 due to market anxiety.

As traders seek indications of a market recovery, analysts from BlackRock, the world’s largest asset manager and a prominent bitcoin spot ETF issuer, have cautioned about potential “volatility flare-ups” on the horizon. They have also predicted that the Federal Reserve might not implement rate cuts as swiftly as market expectations suggest.

BlackRock Investment Institute strategists, led by Jean Boivin, highlighted various factors contributing to market volatility. These include concerns over a looming recession, pre-election uncertainties, and profit-taking activities in preparation for new stock offerings. The strategists emphasized that they do not foresee the Federal Reserve reducing policy rates as drastically as the market foresees.

The recent uptick in the bitcoin price, in tandem with the stock market, comes as traders await upcoming inflation data that could influence the Federal Reserve’s decision on a potential interest rate cut next week. The Fed is widely anticipated to lower interest rates during its upcoming policy meeting, marking its first post-pandemic rate cut and potentially signaling a new phase of cheaper borrowing and increased liquidity.

Last week, a lower-than-expected U.S. job report triggered a bitcoin price decline, fueling concerns that delayed rate cuts by the Federal Reserve could push the economy into a recession. Analysts caution that despite near-term inflation trends aligning with the Fed’s targets, long-term inflation projections may restrict the extent of rate cuts.

Bernstein analysts have warned of a possible 50% bitcoin price crash to around $30,000 if Kamala Harris wins the U.S. presidential election. Conversely, they anticipate a surge to $90,000 if former President Donald Trump secures another term due to his favorable stance on blockchain technology. The regulatory environment post-election could significantly impact crypto market dynamics and user engagement with blockchain financial products.

As the election outcome remains uncertain, factors like Federal Reserve policies and ETF movements will continue to shape market sentiment in the lead-up to the election. The crypto prediction platform Polymarket currently favors a Trump victory, with 52% of users betting on his reelection. CEO Yongjin Kim of Flipster, a crypto trading platform, emphasized the ongoing influence of broader market factors on sentiment as the election approaches.