As the Federal Reserve's rate decision on September 17 approaches, the market's expectations for a rate cut have nearly reached consensus; however, the cryptocurrency market has not ignited optimistic sentiment as a result. Analysts warn that even if the Fed does initiate a rate-cutting cycle, Bitcoin's rebound potential may still be limited.
According to the CME FedWatch tool, traders currently estimate a 100% probability that the Fed will cut interest rates in September, with most expecting a 25 basis point cut, but there is still a 10% chance that the Fed will directly cut by 50 basis points.
BTC Markets analyst Rachael Lucas pointed out that the U.S. added only 22,000 non-farm jobs in August, far below the economic experts' estimate of 75,000. This soft employment data indeed adds to the reasons for the Fed to shift to a dovish stance. She stated:
Generally speaking, loose monetary policy is favorable for risk assets like Bitcoin, but the market has already somewhat priced in expectations of interest rate cuts, coupled with institutional investors taking profits, while ETF fund flows remain relatively flat.
Rachael Lucas believes that these two forces offset each other, which is the key reason why Bitcoin's upward momentum is currently limited, leading to price consolidation within a narrow range.
Kronos Research's investment director Vincent Liu expects that even if the Fed decides to cut interest rates, Bitcoin's price trend may still remain weak. He mentioned:
If interest rate cuts reflect economic weakness, it may deepen the market's risk-averse sentiment, while inflation continues to remain high, which also restricts the market's risk appetite.
Before there is a strong inflow of ETF funds or a significant expansion of overall market liquidity, Bitcoin's breakthrough of the $120,000 barrier will still be a hard battle.
Data shows that in the first week of September, the inflow of funds into Bitcoin and Ethereum spot ETFs was significantly lower than during the highs reached in July and August. Since the upward momentum of this market cycle is mainly driven by institutional funds, the slowdown in ETF fund inflows may reflect that the overall market momentum is cooling down.
Rachael Lucas also provides investors with observation indicators: currently, the key support level for Bitcoin is at $110,000.
As long as Bitcoin can hold this level, the market structure remains positive. The resistance level above is at $113,400, with stronger pressure zones at $115,400 and $117,100. If these obstacles can be broken through, it indicates that the market has absorbed selling pressure and is ready to challenge new highs again.
Looking ahead, analysts suggest that investors should focus not only on next week's Federal Open Market Committee (FOMC) meeting but also on potential catalysts both on-chain and off-chain.
On-chain data shows that the supply of stablecoins is nearing historical highs, indicating that the market has sufficient potential 'dry powder' (referring to idle funds that can be deployed at any time) to fuel the next wave of upward movement; at the same time, the balances of Bitcoin and Ethereum on cryptocurrency exchanges continue to decline, alleviating recent selling pressure.
Off-chain, attention should be paid to the latest developments in regulation, especially the regulatory framework integration promoted by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as well as the flow of ETF funds, all of which will continuously influence market sentiment.
Vincent Liu also reminds that the initial unemployment claims data in the U.S. released the day after the FOMC meeting may amplify the market's reaction to policy, becoming another key test for Bitcoin's price.
"If the Fed decides to cut interest rates, 'Bitcoin will definitely rise'? Analysts say this" this article was first published in (Block客).
