Fed Rate Cut Looms This Week: Is Bitcoin About to Explode?

Markets hold their breath as the Federal Reserve prepares to potentially slash rates—and crypto traders are already positioning for the seismic shift.

Liquidity On The Horizon

Rate cuts typically pump fresh liquidity into the system. More dollars chasing the same assets? That’s rocket fuel for risk-on plays like Bitcoin.

Bitcoin’s Monetary Reflex

Unlike traditional markets that wait for signals, Bitcoin often front-runs monetary policy shifts. It doesn’t wait for permission—it anticipates.

The Institutional Trigger

Cheaper money means bigger bets. Hedge funds and corporate treasuries could pile into BTC faster than you can say 'asymmetric upside'.

Short-Term Volatility, Long-Term Gain

Expect knee-jerk reactions post-announcement. But remember—macro trends favor hard assets over fidgety fiat. Especially when the Fed starts playing loose with the money printer… again.

So while traditional finance debates basis points, Bitcoin’s already pricing in the decay of the old system. Typical, really—Wall Street analyzes the past while crypto builds the future.

Key Insights:

• The crypto market retreated today as investors booked profits ahead of a major event this week.
• The odds of a 25 bps Fed rate cut now sit at 94%.
• A top analyst said that Bitcoin price may target a new all-time high (ATH) if it breaks through the resistance at $118k.

The crypto market started the week on a low note, despite market watchers betting heavily on a potential Fed rate cut this week. However, many have deemed the current pullback or pause as a healthy market cycle.

In addition, the market pundits have also shared bullish forecasts on the future trajectory of the assets.

For context, an analyst has recently highlighted key resistance levels for Bitcoin price, breaking which could push BTC to a new all-time high.

However, the recent pullback has cast doubts among some traders, who are looking for the potential reasons behind the pause.

So, here we explore the likely factors that have impacted the broader market sentiment and see what may lie ahead for the crypto market.

Why is the Crypto Market Falling Today?

A flurry of factors might have caused the recent pullback in the broader crypto market. For context, many investors appear to be booking profits after a robust rally in the digital assets last week.

Usually, the investors often book profits when the prices of BTC and other assets go up. Having said that, it seems that the recent rally in crypto prices has allowed many investors to record some profits.

Meanwhile, this is further evidenced by the on-chain data. According to CoinGlass, the crypto market saw an overall liquidation of $439.4 million in the last 24 hours.

Ethereum liquidation hits $109.21 million while BTC saw a liquidation of $45.11 million.

On the other hand, market participants may be taking a pause ahead of the anticipated Fed rate cut this week. It is often seen that the market consolidates or retreats ahead of key macroeconomic events.

For context, the investors wait to gauge the broader market sentiment before putting their bets ahead of big events. So, this could be another major factor behind the recent selloff in the crypto market.

Crypto Market Awaits US Fed Rate Cut This Week

The US Federal Reserve is expected to trim the policy rates this week, despite the hotter-than-anticipated US CPI data last week. The FOMC interest-rate decision, followed by Fed Chair Jerome Powell’s press conference, is one of the most awaited events this week, scheduled for September 17.

According to the CME FedWatch Tool, the odds of a 25 bps rate cut are now at 94.2%, with the remaining percentage expecting a 50 bps rate cut.

Having said that, the market experts have already warned of some volatility ahead of the rate cut, while also hinting at a likely rally following the announcement.

The lower rates help boost liquidity in the market, which has proven to be a boon for the riskier assets like Bitcoin. However, if the US Fed delays the rate cut or takes a hawkish stance, it might hinder the anticipated rally in the crypto market.

What’s Next for Bitcoin Price?

BTC price today also took a hit amid a broader crypto market selloff. The BTC price lost around 1% during writing but held the support at $115,000, and its one-day volume rose 3% to $45 billion.

Notably, the crypto has hovered between $116,747 and $114,684 in the last 24 hours. However, despite a robust rally and massive inflow into the US Spot bitcoin ETF last week, BTC has failed to breach through the resistance at $117k.

Amid this, a recent report from Glassnode said that Bitcoin price is likely to consolidate at the $114k level for some time with soaring institutional demand.

Simultaneously, analyst Ali Martinez highlighted $116,963 as a key “supply wall” ahead for BTC. In other words, if the flagship crypto manages to break through this level, it could continue to climb upward in the NEAR future.

Echoing a similar sentiment, expert Michael van de Poppe said that if Bitcoin breaks through the resistance range between $117.5k and $118k, it could target a new ATH.

However, despite that, he has warned of short-term volatility in the crypto market this week amid Fed rate cut anticipation.