The Federal Reserve announced the first rate cut since early 2020, with 50 basis points. More rate cuts are on the table going into the end of this year, with another 75 bps anticipated. Bitcoin has risen to $62,000 on the news, with bulls looking to take advantage of increasing liquidity.
A new easing cycle
Not just the U.S., but the world, have entered a new economic cycle of easing, designed to cope with faltering economies, and the next roll-over of staggering piles of debt.
That the first Federal Reserve rate cut in four years should be a large 50 basis point one, is testament to how worried the Fed must be about worsening jobs figures, and a further tipping of the economy towards recession.
It’s in this new, easing monetary environment that Bitcoin now finds itself. The king of the cryptocurrencies is very likely to now start making hay, and to lift itself out of the long and depressing sideways and downwards price action of the last six months.
$BTC breaks descending trend line
Source: TradingView
The short term time frame is very revealing for the $BTC price. The descending trend line has been broken, together with what was strong resistance at $61,000, and now the important horizontal level of $58,000 has been left behind in the rear-view mirror.
Into the bargain, the price is currently attempting to take hold above the 0.618 fibonacci. Should it manage to do so, the 0.786 fibonacci awaits above, just past the last local high. For $BTC to make that higher high is critically important, in order to avoid a continuation of the down trend, and to officially set a new uptrend.
The path out of the $BTC bull flag
Source: TradingView
Looking at more of a macro picture on the weekly time frame, the bull flag can be seen in all its glory. With economic conditions now becoming very favourable for Bitcoin over the next several months at least, it would possibly take a lot to stop the price exiting from the top of the bull flag.
That said, in markets it’s always best to take things one step at a time. The first step is to confirm that $61,000 becomes the new support. Then it’s on to the resistance at $65,000 and to make that crucial new higher high. Once past this, a breakout of the bull flag, and then a new all-time high would potentially send Bitcoin to $100,000.
RSI to confirm trend break on Sunday
Very importantly, one of the macro indicators that is signalling the next price surge, is the Relative Strength Index (RSI). At the bottom of the chart it can be seen that the downtrend looks as though it is being broken. End of play this Sunday will confirm as to whether this will be the case. If so, this is likely to signal strong upward price momentum going forward into the next few weeks.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2024/09/bitcoin-btc-enters-new-environment-of-lower-rates-bull-market-recommences