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Bitcoin rallied and moved above $115,000 last week as expectations of Federal Reserve interest rate cuts rose and as exchange-traded inflows jumped by over $2.3 billion.
At last check on Sunday, Sept. 14, the top cryptocurrency was down 0.5% for the day. See below.
- Bitcoin price has rallied ahead of the Federal Reserve interest rate decision.
- Economists expect the bank to cut interest rates by 0.25%.
- While $BTC price may jump, the rising wedge pattern points to a dive.
Federal Reserve to cut interest rates
The most significant macro tailwind this week will be the Federal Open Market Committee (FOMC) interest rate decision on Wednesday.
Kalshi and Polymarket oddsof a 25 basis point cut stand at almost 100%. Similarly, the CME FedWatch Tool confirms this view.
In theory, the start of the Federal Reserve interest rate cuts should be bullish for Bitcoin ($BTC) and the crypto market. Historically, these assets have thrived in the era of easy money policies but struggle when the Fed tightens.
For example, Bitcoin price jumped to a record high during the pandemic as the Fed slashed rates and then crashed to below $16,000 as the bank hiked in 2022.
Fueling the bullish case is that the rate cut is coming towards the fourth quarter, which is usually its best-performing ones. CoinGlass data shows that the average Bitcoin return in Q4 since 2013 is over 84%.
However, there is a risk that the Fed cut will not boost Bitcoin for two main reasons. First, the rate cut has already been priced in, which would make it a sell-the-news opportunity. This risk will be elevated if the Fed delivers a hawkish cut.
Bitcoin price has formed a risky pattern
The other main risk is that the Bitcoin price has formed a nearly-perfect rising wedge pattern on the weekly chart. This pattern consists of two ascending and converging trendlines. With this convergence happening, there is a risk that a breakdown will happen soon.
The other technical risk is that oscillators like the Relative Strength Index and the MACD have formed a bearish divergence pattern. This pattern occurs when the asset price has a downward trajectory despite being rising.
As such, while the Fed cut is highly bullish for Bitcoin and the crypto market, there is also a risk of a potential pullback when it happens.