Bitcoin May Face Short-Term Pressure Amid Fed Caution but Could Rebound with Potential Rate Cuts

• Fed’s cautious stance reduced September rate cut odds from 63% to 43%, increasing steady rate expectations to 57%.

• Bitcoin briefly fell to $115.7K post-Fed announcement but rebounded to $118.5K amid mixed altcoin performance.

• BTC’s unrealized profit hit a record $1.4 trillion, signaling potential sell pressure despite bullish liquidity conditions.

Fed rate cuts expectations dip, impacting Bitcoin’s momentum. Stay informed with COINOTAG for the latest crypto market insights.

How Have Fed Rate Cuts Expectations Changed and What Does It Mean for Bitcoin?

The Federal Reserve’s rate cuts expectations for September have sharply declined from over 63% to 43%, reflecting a more cautious economic outlook. This shift has led Bitcoin to face increased selling pressure near the $115K support level. Fed Chair Jerome Powell emphasized a “wait and see” approach, signaling no immediate policy changes, which has tempered risk appetite in crypto markets.

What Impact Does the Fed’s Stance Have on Crypto Markets?

Historically, looser monetary policy and rate cuts boost risk assets like Bitcoin by increasing liquidity. Crypto strategist Matt Mena from 21Shares noted that a Fed pivot could act as a “major tailwind” for BTC, similar to the conditions seen in late 2023 when Bitcoin surged to $100K. However, the current hawkish tone suggests a temporary slowdown, with traders closely watching inflation data and political developments.

Source: CME Fed Watch tool

What Are Bitcoin’s Current Price Movements Following the Fed Announcement?

Bitcoin briefly dropped to $115.7K after the Fed’s decision but recovered to $118.5K as of press time. Despite this rebound, most altcoins lagged, reflecting cautious market sentiment ahead of upcoming inflation data releases. Analyst Matt Mena warns that if BTC falls below the $114K-$115K support zone, a decline toward $110K is possible, indicating short-term volatility.

Source: BTC/USDT, TradingView

How Does Bitcoin’s Unrealized Profit Affect Market Sentiment?

Bitcoin’s unrealized profit recently reached a record $1.4 trillion, according to Glassnode data. This metric often signals heightened sell pressure as investors realize gains near all-time highs. Despite this, crypto analytics firm Swissblock suggests that if quantitative easing or increased dollar liquidity resumes, the BTC rally could continue upward, highlighting the complex interplay of macroeconomic factors.

Source: Glassnode

Source: Swissblock

What Are the Short- and Mid-Term Outlooks for Bitcoin?

In the short term, macroeconomic pressures and a cautious Fed stance may cap Bitcoin’s price below $120K, encouraging profit-taking among investors. However, experts anticipate a potential Fed policy pivot similar to Q4 2023, which could reignite BTC’s upward momentum. The timing of this pivot remains uncertain but is critical for sustaining the bull run.

Frequently Asked Questions

Why Did Fed Rate Cuts Expectations Drop in September?

Fed Chair Jerome Powell’s cautious comments and a “wait and see” approach led traders to reduce the probability of rate cuts in September from 63% to 43%, favoring steady rates instead.

How Could Fed Policy Affect Bitcoin’s Price?

Fed rate cuts typically increase liquidity, boosting risk assets like Bitcoin. A delay or reduction in cuts can slow BTC’s rally by reducing market optimism and tightening financial conditions.

Key Takeaways

• Fed’s rate cuts expectation for September dropped by 20%, shifting market sentiment.
• Bitcoin briefly fell to $115.7K post-Fed announcement but rebounded to $118.5K.
• BTC’s unrealized profit hit $1.4 trillion, indicating potential sell pressure despite bullish liquidity.

Conclusion

The recent decline in Fed rate cuts expectations has introduced short-term uncertainty for Bitcoin’s bull run, with price action reflecting cautious investor sentiment. However, historical patterns and expert analysis suggest that a future Fed pivot could reignite BTC’s momentum. Staying informed on macroeconomic developments remains essential for crypto investors navigating this evolving landscape.