Why is Bitcoin price down today?

Bitcoin (BTC) price is giving up some of the gains it secured recently, primarily as traders become more focused on what will happen to the United States economy after the Federal Reserve’s interest rate decision this week.

Macroeconomic catalysts push Bitcoin price down

As of Sept. 16, the BTC price had fallen by 1.80% to around $58,125, continuing its depreciation from the local high of $60,670, established four days ago.

BTC/USD daily price chart. Source: TradingView

However, the long bearish wick on the latest daily candlestick suggests bullish rejection, indicating that the recent downturn was likely driven by short-term traders taking profits ahead of the Federal Open Market Committee (FOMC) meeting on Sept. 18-19.

Fed officials are expected to cut the benchmark lending rate by at least a quarter percentage point when they conclude their two-day meeting on Wednesday. That is due to the recent US Consumer Price Index (CPI) data, which shows inflation seemingly under control and signs of weakness emerging in the labor market.

Target rate probabilities for the September Fed meeting. Source: CME

Lower rates are considerably bullish for riskier, non-yielding assets like Bitcoin. However, crypto traders are practicing caution before the Fed decision, and the Bank of Japan braces to raise interest rates at their meeting on Sept. 20, just a day after the Fed’s decision.

The caution is linked to the “yen carry trade” and its potential impact on Bitcoin. This trading strategy involves borrowing yen at low interest rates to invest in higher-yielding assets. If the Bank of Japan raises interest rates, the cost of borrowing yen will increase, potentially leading to an unwinding of these trades.

JPY/USD daily price chart. Source: TradingView

This could result in selling pressure on riskier assets like Bitcoin, similar to what happened in early August.

Therefore, while a rate cut from the Fed could be bullish for Bitcoin, the uncertainty around the Bank of Japan’s decision introduces a layer of risk, prompting traders to remain cautious until both central bank meetings conclude.