Bitcoin (BTC) marks time as potential Fed rate cuts draw nearer
If one looks at the price action of Bitcoin (BTC) over the last three months or so it is pretty much a period of sideways accumulation. Could this be about to end as the US Federal Reserve potentially makes its first interest rate cut in just over a week’s time?
A lagging US central bank about to cut?
The next Federal Reserve FOMC meeting will take place on 17 September. In this meeting, Fed Chairman Jerome Powell will be expected to announce the first US rate cut for some period of time.
The other major central banks are already well into their rate cut cycles. According to the Kobeissi letter on X, 88 global rate cuts have already taken place, potentially making 2025 the 3rd-fastest rate cutting cycle in history. Europe has cut 4 times, the Bank of England 3 times, and the Bank of Canada twice. The Swiss National Bank is already back at 0%.
Ahead of the FOMC meeting, the CME Fedwatch tool illustrates a market expectation of around 90% for a 25 basis points cut, while there is a 10% outside chance of a 50 basis points cut.
No stock market guarantees even if rate cuts start in earnest
However, even with all the market elation over the commencement of a potential rate cut cycle from the US central bank, it has to be borne in mind that when the first rate cuts began in previous historical cycles, this actually coincided with some big declines in the US stock market.
For example, in the Dot-com bust, the S&P 500 fell 49% from the 2000 peak through to 2002, while the Great Financial Crisis saw the S&P 500 fall 57% from the 2007 peak to the 2009 bottom. Could a similar thing happen this time? One always needs to prepare for such an eventuality.
$BTC price in new ascending channel
Source: TradingView
The short-term time frame for the $BTC price shows how a new channel has formed. The previous channel was descending, and led the price from the $124,000 top to the $107,000 local bottom. Now it can be seen that the price is in an ascending channel. This channel is heading up at a slightly more sedate angle than the downward angle of the previous one, and this might be seen as a steady healthy climb – at least so far.
Huge obstacles confront further upside progress
Source: TradingView
The daily time frame for $BTC reveals that the price has come up against a big impediment against further upside. This is in the form of the big $112,000 horizontal resistance, but not only that, the 100-day simple moving average (100-day SMA) (green line). This could be a battle royale, and the outcome may decide whether this particular ascending channel will continue to ascend, or whether the price will break down through the bottom just as it seemed that the bulls had begun to get a head of steam up.
$112,000 horizontal resistance level is the key
Source: TradingView
The weekly time frame puts things even more into perspective. The red arrows illustrate where the $112,000 level has acted as strong resistance, while the green arrows indicate the times of strong support.
As can be observed, the current weekly candle is right up against that battleground resistance/support level once again. Having previously broken through and closed several candles above, could the bulls do it again, or is this current touch of the line just a retest of the breakdown before going lower?
At the bottom of the chart is the potential 7th cavalry for the bulls. The Stochastic RSI indicators haven’t quite hit the bottom of their range, but the blue indicator line has started to angle back up and is shaping to cross back over the red indicator line.
Another week is needed in order to see whether this bullish cross back up is confirmed. If it is, the likelihood is that this week’s green candle will have closed above the major resistance. Then it could be all systems go for Bitcoin.
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.
source : https://cryptodaily.co.uk