BTC Price Forecast: Bullish Momentum Builds as Fed Cuts Rates by 50 Basis Points

Cryptonews Economy John Brightwater September 19, 2024

BTC Price Forecast: Bullish Momentum Builds as Fed Cuts Rates by 50 Basis Points

Summary
On September 18, Bitcoin rose 2.41% to $61,774 amid a 50 basis point interest rate cut by the U.S. Federal Reserve, which unexpectedly boosted market demand. However, U.S. BTC-spot ETFs saw net outflows, and upcoming labor market data could shift BTC’s price trajectory, with targets for both bullish and bearish scenarios identified. Ethereum remains bearish as it trades below key moving averages, reflecting broader market trends.

On September 18, Bitcoin (BTC) experienced a significant advance, rising by 2.41%, building on a prior rally of 3.71% and closing at $61,774. This uptick was part of an upward trend in the broader cryptocurrency market, which surged by 2.09%, raising its total market capitalization to $2.082 trillion. The impetus for this bullish momentum stemmed from the U.S. Federal Reserve’s unexpected decision to cut interest rates by 50 basis points, defying the consensus expectation of a more conservative 25 basis points cut. The aggressive move by the Fed, alongside indications of a soft economic landing in the United States, heightened demand for Bitcoin. The Federal Open Market Committee (FOMC) projections reveal expectations for the U.S. economy to expand by 2.0% in 2024, down slightly from a previous estimate of 2.1%. Alterations to projections for 2025 and 2026 remained stable at 2.0%, which underscores confidence in a manageable economic trajectory. The Fed’s communications indicated a dovish outlook for future interest rate movements, anticipating the Fed Funds Rate to decrease to 4.4% by December 2024, a revision from June’s forecast of 5.1%. Additionally, projections for 2025 have been adjusted to predict a rate of 3.4%, down from 4.1%. However, amidst this optimistic surge in Bitcoin prices, the U.S. Bitcoin spot exchange-traded funds (ETFs) faced challenging conditions, indicated by net outflows. Specifically, on September 18, excluding the iShares Bitcoin Trust, U.S. BTC-spot ETFs saw net outflows amounting to $52.7 million, a stark decline from the inflows of $186.8 million observed the preceding day. Concurrently, the Nasdaq Composite Index experienced a decrease of 0.31%, reflecting investor reactions to the news. Market observers noted the critical role that upcoming U.S. labor market data, scheduled for release on September 19, could play in influencing BTC-spot ETF flows and Bitcoin price trajectories. Economists project that initial jobless claims will remain steady at 230,000 for the week ending September 14. Any unexpected fluctuations in jobless claims could significantly impact the Fed’s growth forecasts and, consequently, BTC demand. A favorable jobs report might propel Bitcoin toward $65,000, while adverse claims data could result in a retreat to the $55,000 level. Other relevant economic indicators, such as the Philadelphia Fed Manufacturing Index and housing market statistics, are expected to be overshadowed by labor data as discussions regarding potential Fed interest rate adjustments in November gain momentum. Arch Capital Global Chief Economist Parker Ross remarked on the ongoing discourse surrounding the upcoming FOMC meeting, expressing, “Now that we have the September FOMC out of the way, let’s start the waaaay too early debate about the November meeting… Reminder, the FOMC decision will be announced on Nov 7, mere days after Election Day for those who observe.” Investors should remain vigilant, as labor market developments are poised to play a crucial role in dictating BTC’s market dynamics. It is advisable for market participants to keep abreast of the latest news and analytical insights to effectively manage their cryptocurrency investments. Bitcoin currently trades above its 50-day and 200-day Exponential Moving Averages (EMAs), suggesting bullish indicators in terms of price action. A breakout above the $62,500 mark could pave the way for a move towards the $64,000 resistance level. Conversely, a breakthrough beyond the $64,000 threshold may set bulls toward targeting $67,500. However, should Bitcoin drop below the support level of $60,365, it may test the 50-day and 200-day EMAs, with further declines potentially directing it towards the $55,000 mark. The relative strength index (RSI) reading stands at 59.10, indicating that Bitcoin could breach the $64,000 resistance before entering an overbought situation. Meanwhile, Ethereum (ETH) is positioned well below both its 50-day and 200-day EMAs, reflecting bearish market tendencies. A breakthrough above the resistance level of $2,403 could provide momentum towards the $2,500 level, with further advances targeting $2,664. Notably, an ETH dip below $2,200 could catalyze a move towards $2,124 and possibly $2,000, given the 14-period daily RSI reading of 46.11, which indicates a potential to plunge into oversold conditions.

The discussion surrounding Bitcoin and its price movements has recently intensified in light of geopolitical events and economic indicators affecting the U.S. market. A notable catalyst for Bitcoin’s recent gains has been the U.S. Federal Reserve’s monetary policy decisions, particularly the cut in interest rates intended to support economic growth amidst a softening outlook. The relationship between fiscal policy and cryptocurrency demand has become a focal point as investors react to economic data that may signal changes in the Fed’s approach moving forward. In this context, the performance of Bitcoin has not only been influenced by natural market forces but also by external factors such as labor market conditions and broader economic projections.

In summary, Bitcoin’s recent bullish performance can be attributed to the U.S. Federal Reserve’s unexpected interest rate cut and projections of a soft economic landing. The cryptocurrency is poised for further price movements based on forthcoming labor market data, which could significantly influence demand and market flows. While the outlook remains optimistic with potential resistance targets ahead, careful attention must be paid to labor statistics and the broader economic context that could present challenges moving forward. Investors are urged to stay informed and consider both BTC-spot ETF trends and macroeconomic signals in their investment strategies.

Original Source: www.fxempire.com