The Federal Reserve surprised markets this week by cutting interest rates by 50 basis points, which was widely expected. The S&P 500 hit a record high, while gold prices continued to rise.

Bitcoin also responded positively, rising from $63,012 to $64,133. However, despite the Fed policy change, Bitcoin's price remained within a six-month range, with a structural downtrend, making lower highs on the weekly timeframe, and being affected by futures liquidations.

BTC/USDT weekly chart. Source: TradingView

Currently, Bitcoin price is facing resistance around $65,000 (old high from August 24), which coincides with the 200-day moving average. If the weekly candle closes below this level, the weekly lower high pattern continues.

If Bitcoin fails to sustain the breakout with sufficient spot volume, the price could retest support around the 20-day moving average, which ranges from $58,500 to $60,000. Over the past six months, much of Bitcoin's price action has been driven by futures and options liquidations.

Overview of Bitcoin futures liquidations and spot volume for 1 week. Source: Coinalyze

On the other hand, after this week’s FOMC meeting, there was an increase in Bitcoin’s open interest volume and if traders continue to attack the $64,000 to $66,000 zone, there is a possibility of a descending channel breakout and a change in Bitcoin’s higher time frame market structure.

Bitcoin price is struggling as it has failed to break above the channel's descending trendline since April 24. Bulls need to push the price to close above $66,300 to break this trend.

According to JJ, director of options and derivatives at HighStrike, if Bitcoin breaks above the 200-DMA ($64,000), it could trigger large short liquidity blocks and short gamma orders. However, it would first need to overcome the seller barrier on Coinbase.

Bitcoin GVOL GEX. Source: JJ the Janitor
BTC/USDT 1-day chart at Coinbase. Source: JJ the Janitor

Traders also pointed to the synchronicity of the Fed’s rate cut roughly coinciding with the start of Q4 and the September 20 news of the U.S. Securities and Exchange Commission approving options on BlackRock’s Bitcoin spot ETF.

According to Capriole Investments founder Charles Edwards: 

“Q3 is the worst time to invest in Bitcoin. Q4 is the best time.”

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