The Bitcoin (BTC) market experienced a notable rejection at a significant resistance level, specifically the 50-day moving average, which was observed around $61,300 on Thursday. Following this rejection, the price receded to approximately $60,000, notwithstanding the release of new economic data that challenges the prevailing narrative of an impending recession for the United States economy.

In a forthcoming speech at the Jackson Hole Economic Symposium, Federal Reserve Chair Jerome Powell is anticipated to indicate the forthcoming implementation of a series of interest rate reductions, beginning next month. The critical question arises: Will Mr. Powell’s statements contribute to a surge in Bitcoin’s price?

Market expectations currently suggest a modest probability of 25% for a 50 basis points (bps) rate cut in the upcoming month. Should the actual announcement only confirm a 25 bps reduction, this might lead to a slight disappointment among traders who are speculating on more aggressive rate cuts. Consequently, Bitcoin may encounter marginal downward pressure as positions favoring a larger cut are unwound.

However, the focus of the market will likely extend beyond the immediate next cut and concentrate on the Fed’s longer-term monetary policy trajectory. Current estimates indicate that markets are anticipating approximately 125 bps worth of rate reductions by the conclusion of 2025, as per data from the CME. Therefore, Mr. Powell’s remarks will be scrutinized closely, given their potential to influence these extended market expectations.

Even if the long-term outlook remains unchanged, the prospect of an impending rate-cutting phase by the Federal Reserve could serve as a supportive backdrop for the cryptocurrency market. Lower interest rates typically enhance liquidity within the economy and financial markets, and this typically results in increased interest towards riskier assets such as Bitcoin.

The anticipated easing of liquidity conditions in the foreseeable future remains a plausible factor contributing to Bitcoin’s potential rise towards the $100,000 mark within the next year. Additional bullish long-term catalysts may include an increasingly favorable political climate in the United States, the ongoing adoption of Bitcoin-related Exchange-Traded Funds (ETFs), and the delayed effects of the Bitcoin halving.

In terms of immediate trading opportunities, market participants should remain vigilant for a potential breakout from the recent pennant formation, which could pave the way for a return to the July peaks around $70,000. However, any breakthrough leading to new record highs may need to be postponed until after the summer and possibly until the conclusion of the U.S. electoral cycle.

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