Bitcoin’s price is experiencing a notable decline today, dropping to around $58,125 from a recent high of $60,670. This decrease comes as traders adjust their positions in anticipation of significant macroeconomic events, notably the upcoming decisions by the U.S. Federal Reserve and the Bank of Japan. Here’s a closer look at the key factors influencing Bitcoin’s recent price movement.
As of September 16, Bitcoin has decreased by 1.80%, reflecting a broader trend of market adjustment ahead of critical central bank meetings. The Federal Open Market Committee (FOMC) will meet on September 18-19 to discuss the U.S. interest rate policy. Analysts expect the Fed to cut the benchmark lending rate by at least a quarter percentage point, given recent Consumer Price Index (CPI) data showing inflation under control and emerging weaknesses in the labor market.
Historically, lower interest rates are bullish for assets like Bitcoin, which do not yield interest but benefit from increased risk appetite in a low-rate environment. Despite this, Bitcoin traders are exercising caution. The upcoming decision by the Bank of Japan, scheduled for September 20, adds an extra layer of uncertainty. The Bank of Japan is expected to consider raising interest rates, impacting global liquidity and potentially affecting risk assets, including Bitcoin.
The Bank of Japan’s potential rate hike could lead to an unwinding of the “yen carry trade,” a strategy where investors borrow yen at low rates to invest in higher-yielding assets. An increase in Japanese interest rates would raise borrowing costs, potentially leading to selling pressure on riskier assets like Bitcoin, similar to what occurred in early August.
This interplay between U.S. and Japanese monetary policies is creating a complex environment for Bitcoin traders. While a rate cut from the Fed might support Bitcoin’s price, uncertainty around the Bank of Japan’s policies is causing market hesitation.
Another contributing factor to Bitcoin’s decline is the increase in BTC balances across exchanges. According to Glassnode data, the total BTC held by exchanges has risen to over 3.019 million, up from approximately 3 million at the end of August. This increase suggests that more traders are moving their Bitcoin to exchanges, potentially adding sell pressure to the market.
Moreover, Bitcoin miners are also adding to the selling pressure. As noted in recent data, Bitcoin mining revenues have hit their lowest levels in nearly a year. Declining revenues may force miners to sell more of their mined Bitcoin to cover operational costs, further contributing to the price decline.
From a technical perspective, Bitcoin’s price decline is part of a broader correction trend. The cryptocurrency tested the upper trendline of its current descending triangle pattern as resistance, leading to the recent downturn. Historically, similar tests have resulted in corrections.
The technical target for Bitcoin’s price in September appears to be near the lower trendline of this descending triangle channel, which aligns with the $52,500-$53,000 range. However, if Bitcoin can move above the 50-day and 200-day exponential moving averages, it could invalidate this downside scenario and potentially push the price higher.
Looking ahead, Bitcoin’s price could face continued volatility as the market reacts to central bank decisions and macroeconomic data. Traders and investors will be closely watching the outcomes of the Fed and Bank of Japan meetings, as well as monitoring technical indicators for potential signs of a reversal.
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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