Due to concerning U.S. GDP data increasing the likelihood of Fed rate cuts, Bitcoin prices are preparing to break out of consolidation.
Due to market expectations that the Fed may cut rates sooner than expected, Bitcoin broke through $95,000 again on May 1, reaching a high of $97,424, and currently stands at $96,500.
A Fed rate cut will drive Bitcoin prices up.
After the U.S. GDP data reflected an economic contraction, the price of Bitcoin fell below $93,000, then rose slightly in the following hours.
Economic contraction may prompt the Fed to cut rates sooner to stimulate economic activity. This would lower yields on traditional assets like bonds, prompting investors to turn to Bitcoin and risk assets.
The possibility of the Fed cutting interest rates at the Federal Open Market Committee meeting on June 18 has increased over the past week, rising from 57% on April 30 to 60% on May 1.
Rate cut expectations have historically been a positive catalyst for risk assets and Bitcoin. For example, before the last Fed rate cut on December 18, 2024, Bitcoin rose over 20%. Despite economic contraction and low consumer confidence, traders expect the Fed to take easing and rate-cut measures in the future.
The focus now shifts to the employment report on May 2, which reveals how many jobs were added to the U.S. economy in April and how this will affect the cryptocurrency market, subsequently influencing the price of Bitcoin.
What will be the next move for Bitcoin prices?
Currently, $9,000 is a key level of interest for traders, as the market believes that a sustained breakout above this resistance zone will open the door for a rapid rise.
Prices have recently surged above two key technical levels and are currently attempting to consolidate within that area.
The 111-day Simple Moving Average (SMA) is $91,300, and the short-term holding cost basis (STH) is $93,200. Bitcoin has recovered these levels in its recent rise, highlighting the strength behind this move.
These levels must be broken and maintained to further drive the price up, as falling below this level would return the price to a bearish zone and put many investors in a state of significant unrealized losses.
BTC has broken out of consolidation, and the next logical move is towards the psychological barrier of $100,000.
If it falls below the April 30 low of $93,000, BTC/USD may further drop to the $84,000 and $88,000 range. If the price consolidates and continues to rise without obstruction, BTC will move towards the $100,000 area.
