Bitcoin Price Analysis: BTC In The Red As Markets Await Fed’s Rate Cut Decision
Bitcoin (BTC) is down nearly 1% as markets gear up for the Federal Reserve’s decision on interest rate cuts. Federal Reserve Chair Jerome Powell is expected to cut interest rates by 25 bps after concerning labor market data. Some market watchers believe Powell could cut interest rates by 50 bps.
The Fed had kept interest rates steady for five consecutive meetings, but a slowing economy could see the first rate cut of 2025 as Powell looks to address fiscal concerns.
Bitcoin (BTC) Defies Historical September Bearishness
BTC has gained nearly 6% this month, defying expectations of a bearish September. According to options data, bullish sentiment outweighs bearish positions, with traders positioning themselves for higher prices in Q4. According to Sean Dawson, head of research at Derive, the crypto market is only halfway through its fourth-quarter upswing. Dawson cited supportive macroeconomic trends and options flows. He also dismissed speculation that the current bull cycle had peaked.
“I’ve seen a lot of FUD that the music is about to stop. Some nasty drawdowns may indeed hit us in the next few weeks. However, I believe the market is bright for the rest of Q4. This is, by no means, ‘it’ for the bull cycle; there’s plenty of gas left in the tank.”
Another Bitcoin (BTC) Whale Awakens Before Fed Decision
A dormant Bitcoin whale has moved $116 million worth of BTC after 12 years, making the transfer just before the Federal Reserve’s decision on interest rates. The whale transferred 1,000 BTC, initially acquired for $847 per coin, to new wallets, according to a post on X by blockchain data platform Lookonchain.
Analysts and traders believe the Federal Reserve’s decision on interest rates will be the most significant of the year, with nearly all participants expecting a 25-bps rate cut. Into The Cryptoverse founder Benjamin Cowen stated in a post on X,
“Tomorrow is the most important FOMC of our lives …until the next one.”
Despite the optimism surrounding a potential rate cut, most traders are positioning themselves for a drop in prices in the short term. According to blockchain data from CoinAnk, 57% of Bitcoin holders across major exchanges are short, meaning they are betting on a price decline. Meanwhile, only 42% are long. Bitcoin futures open interest has also dropped by over $2 billion over the past five days, indicating more de-risking among futures traders.
Bitcoin (BTC) Price Analysis
Bitcoin (BTC) is down nearly 1% during the ongoing session as selling pressure around the asset intensifies. The flagship cryptocurrency faced considerable volatility this week after ending the weekend in the red. The price reached an intraday high of $116,802 on Monday before settling at $115,381. Bullish sentiment persisted on Tuesday as BTC rose 1.26% to cross $116,000 and settle at $116,832. However, selling pressure has returned during the ongoing session, with the price trading below $116,000.
While the market is preparing for a short-term drop, some analysts believe BTC could reach $120,000 on Wednesday. The flagship cryptocurrency’s price strength is supported by centralized exchange withdrawals, ETF inflows, and growing institutional interest. However, the immediate impact of a rate cut is up for debate. The sharp drop in Bitcoin held on centralized exchanges is crucial for short-term price action. According to Glassnode, 44,000 BTC were withdrawn from exchanges in September alone, reversing high deposit activity a month prior.
Bitcoin ETF inflows also support an increase in the short term. ETF inflows have helped restore investor confidence, with US-listed ETFs registering over $2 billion in net inflows between Wednesday and Monday. Bond markets are pricing in a 96% chance of a 0.25 bps rate cut, suggesting the flagship cryptocurrency could react modestly to Wednesday’s press conference.
According to analysts at Bitfinex, BTC established a new resistance around $116,000. The analysts stated that this level would remain as resistance until decisively claimed by a new rally.
“BTC now trades at the upper edge of the range near $116,000, which remains resistance until decisively reclaimed.”
BTC’s momentum has waned since it hit a new all-time high in August, with the price struggling to reclaim lost levels. However, the price has rebounded this week as markets expect an interest rate cut following the FOMC meeting on Wednesday. Analysts are divided about how BTC will react to a rate cut. According to Fundstrat co-founder Tom Lee, an interest rate cut could help the flagship cryptocurrency make a monster move in the next three months. However, others remain skeptical, with one analyst stating BTC could dip below $104,000 before recovering.
BTC faced volatility over the past weekend as it reached an intraday high of $113,390 on Friday (September 5). However, it failed to stay at this level and settled at $110,670, ultimately registering a marginal decline. Sellers retained control on Saturday as the price fell 0.41%. BTC recovered on Sunday, rising nearly 1% to end the weekend at $111,129. The price continued pushing higher on Monday, rising 0.85% to cross $112,000 and settle at $112,072. However, it lost momentum on Tuesday, dropping 0.47% to $111,547. Positive sentiment returned on Wednesday as BTC rallied, rising over 2% to cross $113,000 and settle at $113,983.
Source: TradingView
Buyers retained control on Thursday as BTC rose 1.37%, crossing $115,000 and settling at $115,540. The price continued pushing higher on Friday, rising 0.49% to cross $116,000 and settle at $116,106. Despite the positive sentiment, price action turned negative over the weekend as BTC registered a marginal decline on Saturday and fell 0.56% on Sunday, ending the day at $115,314. BTC faced volatility on Monday as buyers and sellers struggled to establish control. Buyers ultimately gained the upper hand as the price registered a marginal increase. BTC registered a sharp increase on Tuesday, rising over 1% to cross $116,000 and settle at $116,382. Selling pressure has intensified during the ongoing session, with the price down over 1%, trading below the $116,000 mark.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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