Bitcoin’s price momentum has captured the attention of traders and analysts alike, especially with the upcoming Federal Open Market Committee (FOMC) meeting just around the corner. With Bitcoin’s price nearing critical resistance levels, the question on everyone’s mind is: will a rate cut from the U.S. Federal Reserve trigger the long-awaited rally to $70,000?
Bitcoin has shown impressive strength leading up to the FOMC meeting, climbing 4.5% in the past 24 hours and surging past the $60,500 mark. However, technical analysis suggests that for the rally to truly take off, Bitcoin needs a solid close above $61,900.
Renowned crypto strategist Rekt Capital points out that Bitcoin has been forming lower highs since late July. This downtrend indicates a period of consolidation, with $61,900 being the critical level to break out of the current range-bound channel. If Bitcoin manages to close above this level on the weekly chart, it could pave the way for a significant bull run.
This price action fits within the broader historical pattern, as Bitcoin tends to make a major move approximately 150-160 days after a halving event. Given this timeline, many analysts expect Bitcoin to break out of its current range by late September 2024, just in time for what is historically a stronger month for the cryptocurrency.
September has traditionally been a tough month for Bitcoin, with average declines of around 4.48%. This trend is expected to continue, and many traders are viewing the current price consolidation as the final phase before a breakout.
October, on the other hand, has been a much more favorable month for Bitcoin, with historical average gains of 22.9%. Should Bitcoin manage to break the $61,900 resistance, October could see the cryptocurrency moving toward its next major target — $70,000.
The FOMC meeting, scheduled for September 18, is expected to bring a major shift in U.S. monetary policy, with widespread speculation that the Federal Reserve will cut interest rates. The big question, however, is whether the cut will be 25 basis points (bps) or 50 bps.
A rate cut could inject more liquidity into the market, a factor that typically benefits risk-on assets like Bitcoin. Both JPMorgan and Goldman Sachs have suggested that a modest 25 bps cut is more likely, but some traders are hoping for a more significant 50 bps cut to boost market momentum.
The consensus is that lower interest rates would weaken the U.S. dollar, a scenario that tends to favor Bitcoin, which often benefits from inflation fears and dollar depreciation. If liquidity does flood the markets, Bitcoin could be one of the biggest beneficiaries, potentially pushing its price closer to the elusive $70,000 mark.
While many in the crypto community are optimistic about Bitcoin’s prospects, not everyone shares this enthusiasm. Economist Peter Schiff, known for his skepticism of cryptocurrencies, has warned that a rate cut may not be the boon that many expect. He believes that the rate cuts could reignite inflation, ultimately hurting the U.S. dollar without providing real support for Bitcoin.
Schiff’s argument is rooted in the idea that Bitcoin, despite being seen as a hedge against inflation, may not thrive in an environment where the dollar is rapidly losing value. Instead, he suggests that any temporary gains could be wiped out if inflation accelerates.
Adding to the debate, Massachusetts Senator Elizabeth Warren has pushed for an even larger 75 bps rate cut, citing concerns over the U.S. economy. However, it remains unclear how much influence Warren will have over the Federal Reserve’s decision, especially given her past criticisms of Fed Chair Jerome Powell.
Caitlin Long, founder of Custodia Bank, noted that Warren’s aggressive stance could make things interesting, but it’s unlikely Powell would cave to her demands, especially given her previous attacks on his policies.
As the FOMC meeting approaches, Bitcoin traders are closely watching two key factors: the $61,900 price level and the outcome of the Fed’s rate cut decision. Should Bitcoin manage to close above this critical resistance level, it could signal the start of a broader rally, potentially taking the cryptocurrency toward the highly anticipated $70,000 mark.
However, the outcome of the FOMC meeting will be crucial. A 25 bps cut may provide a moderate boost, but a 50 bps cut could unleash a wave of liquidity that pushes Bitcoin into a new bullish cycle. On the flip side, if rate cuts do reignite inflation as some fear, Bitcoin’s rally could face significant headwinds.
For now, the market remains divided, but one thing is certain: all eyes are on Bitcoin as the FOMC meeting approaches. Whether it’s a rate cut or a technical breakout that propels the cryptocurrency higher, the coming weeks promise to be pivotal in Bitcoin’s journey toward $70,000.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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