Bitcoin & The Fed
Bitcoin is on watch today as traders await the Fed’s September rates decision later today. Weakness in USD ahead of the meeting reflects the broad expectation that the Fed will cut rates today while signalling the likelihood of further easing over the coming months. If the Fed delivers on dovish expectations and we see a fresh sell off in USD, this could provide the catalyst for a breakout move in BTC and the next bull phase. Indeed, ETF inflows have seen a strong run of consecutive daily inflows over the last two weeks, reflecting a bullish bias among institutional investors while retail traders have been exiting positions. Typically, this dynamic has preceded strong periods of upside price action in BTC.
Bearish Risks
However, there are risks today. Given how built-up dovish expectations are, the Fed could disappoint USD bears by not striking a dovish enough tone. If the updated dot plot forecasts fall short of the 3 cuts projected by the market and if Powell is seen focusing too much on upside inflation risks, this could lead to a short squeeze in USD, fuelling a sell off in BTC near-term.
Bullish Q4 Outlook
While any disappointment today could fuel near-term downside in BTC, a correction is likely to find strong demand at deeper levels. The Fed returning to its easing cycle should feed into a lower USD over Q4 with risk assets set to rally. Q4 has also typically been a strong period for BTC averaging returns of more than 80% over the last ten years.
Technical Views
BTC
The correction lower in BTC has found support for now into the $108,855 level. Price has since turned higher but has stalled ahead of a fresh test of the $121,500. These are the two key markers to watch today with $136,395 the higher target if we break out and $100k the key support if we move lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.