Bitcoin price suffered a strong decline at 50DMA around $61,300 ahead of Fed Chairman Powell’s important speech. What’s next?
On Thursday, the Bitcoin (BTC) price broke through a strong 50DM resistance level of around $61,300 before retreating to around $60,000, even as new economic data overturned the view that the U.S. economy is about to fall into a recession.
But Federal Reserve Chairman Jerome Powell is expected to hint at a series of rate cuts starting next month in a speech tomorrow. Will this send Bitcoin prices soaring?
Will Powell Send Bitcoin Prices Soaring?
Federal Reserve Chairman Jerome Powell is expected to signal a series of 25 basis point rate cuts starting next month in his Jackson Hole speech tomorrow.
With markets currently pricing in a 25% chance of a 50 basis point rate cut next month, that could disappoint some traders betting on bigger and faster rate cuts.
Therefore, as bets on a 50 basis point rate cut taper off, Bitcoin prices could see a small drop.
But the magnitude of the September rate cut is not the focus.
It's the Fed's long-term plan, that is, how much and how fast the Fed will cut interest rates in the next few years.
Markets are currently pricing in around 125 basis points of easing by the end of 2025, according to the Chicago Mercantile Exchange.
Powell's comments will be closely watched as they could affect these long-term expectations.
Even if these long-term expectations are intact, the fact that a Fed rate-cutting cycle is imminent may still serve as a tailwind for the cryptocurrency market, even if it is expected.
That’s because lower interest rates mean more liquidity in the economy and financial markets. And that liquidity often ends up chasing riskier assets like Bitcoin.
Easing liquidity conditions in the coming years is one of the reasons why the Bitcoin price could hit $100,000 in the coming year.
A friendlier U.S. political landscape, continued institutional adoption via ETFs, and the delayed impact of the halving supply shock are further long-term bullish catalysts.
As for what short-term traders can expect, keep an eye out for a potential breakout of the recent pennant structure. This could open the door for a return to the July highs of $70,000.
However, any new breakthroughs may have to wait until after the summer, or even after the US election.
