Crypto Rally at Risk: Bitcoin Price Flashes Dangerous Signals Despite Fed Cut Hopes

Bitcoin's teetering on the edge—and the Fed's potential rate cuts might not be enough to save this rally.

Warning Signs Flash Red

Patterns emerging on BTC charts suggest turbulence ahead. Technical indicators that usually signal stability are instead pointing toward potential downside movement. The market's breathing gets shallower by the hour.

Fed Hopes Meet Crypto Reality

While traditional markets cheer potential rate cuts, crypto's playing by its own rules. Lower rates typically boost risk assets, but Bitcoin's internal metrics are overriding macroeconomic optimism. The Fed giveth, and crypto volatility taketh away.

Trader Psychology Shifts

Market sentiment's turning cautious despite the fundamental tailwinds. Options flow shows increased hedging, while leverage ratios suggest professionals are battening down hatches. When the so-called 'smart money' gets nervous, retail often follows.

Remember: Wall Street's always late to the crypto party—they'll buy the top and sell the bottom like clockwork.

Crypto rally fueled by Fed cut hopes and altcoin ETF approvals

The ongoing crypto market rally is happening as investors anticipate that the Federal Reserve will cut interest rates, potentially by 0.50% at its coming meeting.

Odds of Fed cuts ROSE after the US published a weak jobs reportlast Friday. This report showed that the economy created just 22,000 in August as the unemployment rate rose to 4.3%.

It’s a jobs recession. Payroll employment declined in June, and while it was up in July and August, the increases were on the margin and seem likely to be revised away. The goods side of the economy, including manufacturing, mining, and construction, is losing a significant…

The US also published an encouraging producer inflation report. According to the Bureau of Labor Statistics, the headline and Core PPI dropped unexpectedly in August. This report raised the probability that the upcoming CPI data will be lower than expected.

A Federal Reserve cut would, in theory, be bullish for the crypto market as it WOULD boost liquidity, reduce bond yields, and lower the value of the U.S. dollar.

The other potential catalyst for the crypto rally is that the Securities and Exchange Commission will approve multiple altcoin ETFs in October, such as Dogecoin, XRP, and Cardano. These approvals will be bullish for these coins because they will lead to more inflows from American investors.

Bitcoin price bearish flag and wedge patterns point to a retreat 

The daily time frame chart shows that the BTC price remains in a tight range. It has remained below the important resistance level at $115,000.

Bitcoin has formed a rising wedge pattern, which comprises two ascending and converging trendlines. This wedge formed after the coin dropped from the all-time high of $124,200. As such, it is part of the formation of a bearish flag pattern, which often leads to more downside.

Bitcoin has also hit the major S/R pivot point of the Murrey Math Lines. Therefore, it may retreat in the coming days, potentially to the ultimate support at $100,000. 

BTC price formed a giant wedge on the weekly chart

The most bearish forecast for Bitcoin price is on the weekly chart, which shows that the coin has been forming a giant wedge since March last year and that the two lines are nearing their convergence.

The Relative Strength Index and the MACD indicators have formed a bearish divergence pattern, which is often followed by a big drop.

Therefore, if this forecast is correct, it means that the crypto rally could be derailed, as Bitcoin is usually the main catalyst for the broader industry.