Original title: "The Fed's interest rate decision is approaching, BTC challenges the $59,000 resistance level"

Original source: Bitpush

On Thursday, new U.S. inflation and labor data further supported expectations that the Federal Reserve will begin to cut interest rates next week, and financial asset prices trended higher.

The U.S. Producer Price Index (PPI) report for August showed that wholesale prices rose 0.2% month-on-month, slightly higher than economists' expectations, while the year-on-year increase of 1.7% was in line with expectations.

The market currently generally expects the Federal Reserve to cut interest rates by 25 basis points next week, but some traders still hold out hope for a 50 basis point cut. The Chicago Mercantile Exchange (CME) FedWatch Tool gives a 50BP cut probability of 28%, up from 14% yesterday.

The three major U.S. stock indexes closed higher, with the S&P, Dow Jones and Nasdaq rising 0.75%, 0.58% and 1.00% respectively. Spot gold surged 1.91% intraday to a record high of just under $2,560 per ounce.

Bitcoin (BTC) surged above $58,000 in early trading on Thursday, according to Bitpush data. After falling to a low of $57,310 in midday trading, bulls successfully pushed the price back above $58,000 in the afternoon, challenging the $59,000 resistance level.

As of press time, Bitcoin was trading at $58,217, up 1.53% in 24 hours.

In the altcoin market, the top 200 tokens by market capitalization rose across the board. The biggest gainer was Worldcoin (WLD), up 14.6%; followed by Trust Wallet Token (TWT), up 14.3%; and Sui (SUI), up 13.9%. The biggest losers were GMT (GMT), down 6.2%; SuperVerse down 5%; and ConstitutionDAO (PEOPLE), down 4.3%.

The overall market capitalization of cryptocurrencies is currently $2.05 trillion, with Bitcoin accounting for 56.3% of the market.

Expected volatility

Market analyst Bloodgood said that the CPI and PPI inflation data released this week were not much different from forecasts, and the Federal Reserve seemed to be about to enter a fairly orderly rate cut cycle, which should be very beneficial for risky assets.

Bloodgood noted that historically, rate cuts “tend to be accompanied by some initial downside volatility, but that should fade given the upcoming election. Barring some truly unexpected economic developments, the macro outlook for Q4 remains fundamentally bullish.”

Regarding Bitcoin, Bloodgood noted that the price of Bitcoin has fallen to around $50,000 since last week, but bulls stepped in to “save the day” because this time “the pullback was not as rapid as in early August, which suggests that bears are exhausted.”

Bloodgood concluded: “At the time of writing, BTC is trading below the breakout zone, which is a key point in the recent trend. A breakout above this level would quickly lead to higher levels, while a break below would make a test of $50,000 very likely in the coming weeks. From TA , so I wouldn't get my hopes up until the lower highs are broken."

TradingView analyst TradingShot said that rate cuts will lead to an increase in global money supply, which could be the factor driving the next leg up for Bitcoin.

"With the Fed preparing to cut rates next week for the first time since the rate hike cycle began in February 2022, it will be very interesting to see what global money supply and more money in circulation means for Bitcoin," said TradingShot.

In the above figure, the light green and red candles (top) represent the Global Liquidity Index (GLI), which is composed of the Federal Reserve, TGA, RRP, ECB, People's Bank of China, Bank of Japan, Bank of England and other central banks. The icon tracks and measures liquidity/money supply/currency circulating in the global economy.

TradingShot said: "When central banks cut interest rates, they are actually printing more money, injecting a lot of cash into the system, causing the currency in circulation to depreciate. When this happens, it is easier for businesses and/or individuals to get more money through loans, etc., thereby increasing their spending/purchasing/investing power. In principle, this means that investors are more likely to buy riskier assets, which leads to an increase in value. Stocks and cryptocurrencies belong to this category."

TradingShot analyzed: "As shown in this chart, it is not surprising that Bitcoin (the bottom candle) rises whenever GLI starts to rise. More specifically, when liquidity decreases and stabilizes, BTC's bear market cycle is formed, and when it breaks through the resistance level, BTC will begin the rebound phase of its bull market cycle. After the Fed's sharp interest rate hikes led us back to the level before the 2008 real estate crisis, GLI experienced a stronger decline. Instead of flattening out, it formed a wedge with a lower high as resistance. GLI It is now squarely above this lower highs trendline and if broken, we could see a breakout similar to previous cycle resistance breaks, sparking a parabolic rally in Bitcoin.”

Secure Digital Markets analysts believe that Bitcoin has rebounded from the $56,600 support level, a move that is consistent with the bullish crossover observed on the 4-hour chart, with the 20-day and 50-day exponential moving averages (EMA) intersecting. In addition, oscillators on the same time frame showed a bullish divergence, suggesting a possible upside reversal in the short term. But while technical indicators can provide insight into trends, they alone are not enough to accurately predict future movements, and it remains to be seen whether the rebound will push Bitcoin above the $60,000 mark and reach the upper limit of the six-month trading range.

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