Markets see 0.5% Fed rate cut — 5 Things to know in Bitcoin this week

Bitcoin (BTC) starts a pivotal macroeconomic week with the battle for $60,000 support raging.

• After slipping into the weekly close, BTC price action is acting in a key area of interest for bulls.
• Price indicators reveal the extent of the need to reclaim $60,000 — a resistance/support flip here would improve the setup of both the daily and weekly charts.
• This week sees the United States Federal Reserve in the driving seat as it decides on the size of what could be its first interest rate cut in over four years. Markets are confident that the outcome will be just that — but last-minute uncertainty is pushing expectations that the Fed’s move will be more drastic than the bare minimum.
• Bitcoin analysts are biding their time before drawing conclusions on how BTC/USD may react. 
• Bitcoin dominance is at three-and-a-half-year highs, and ETH/BTC spells out taxing times for altcoins.

BTC price weekly close brings bulls down to earth

Bitcoin came under pressure into the Sept. 15 weekly close, costing bulls both $60,000 and a chunk of the week’s recovery.

Data from Cointelegraph Markets Pro and TradingView shows BTC/USD circling the $59,000 mark at the time of writing, having still managed to gain 7.8% over the past week.

“Its going to be a choppy week for Bitcoin,” popular trader and analyst Mark Cullen summarized in a post on X.

Cullen focused on the week’s main macroeconomic event in the form of the United States Federal Reserve’s interest rates decision due on Sept. 18.

“Red start to the week, and key interest rate decision announcement on Wednesday,” fellow trader Jelle continued. 

“Hold the current area until then - and I think it looks great for further upside.”

However, analyzing longer timeframes, Caleb Franzen, founder of Cubic Analytics, saw both the 365-day simple (SMA) and exponential (EMA) moving averages functioning as support.

“Since the initial breakout move in March & April 2023, BTC has been able to stay above its 1-year average and even flip it into support on several occasions, even during the recent pullback in August & September,” he noted in a blog post on Sept. 14. 

“Could it be the case that Bitcoin is simply retesting its 1-year average before continuing higher, as it did in Q2 & Q3 2023? Until proven otherwise, yes!”

Bitcoin indicators spell out resistance hurdles

BTC price indicators are facing a crucial resistance retest as Bitcoin bulls turn up the heat on $60,000.

As Cointelegraph reported, both the Ichimoku cloud and relative strength index (RSI) show key levels primed for being flipped back to support.

However, thanks to the lackluster weekly close on both daily and weekly timeframes, these continue to form a barrier to upside continuation.

On weekly timeframes, BTC/USD remains stuck below the Tenkan-sen and Kijun-sen trend lines on Ichimoku, while RSI is likewise pinned below the key 50 mark.

The daily chart looks moderately better, with the price above 50 but still below the Ichimoku cloud.

On 3-day timeframes, meanwhile, trading team Stockmoney Lizards is eyeing a bullish RSI divergence with price now ripe for playing out to bulls’ advantage.

“A lot is pointing towards a reversal within the last two weeks of September. Uptober is coming,” it summarized.

Markets bet on Fed rate cut curveball

One event is set to shape macroeconomic volatility this week: the US Federal Reserve’s interest rate cut.

The first since March 2020, the move, which will only be confirmed at the Federal Open Market Committee (FOMC) meeting on Sept. 18, has nonetheless long been priced in by markets. 

The only question is how large it will be; the debate currently centers on 0.25% and 0.5%, and the latest data from CME Group’s FedWatch Tool currently sees the latter as more likely.

For Bitcoin, the picture is complex — while risk assets should technically benefit from the added liquidity flowing into markets as a result of policy easing, observers are already drawing comparisons not to past good times, but crashes.

“While rate cuts may sound positive, it signals deeper concerns—like collapsing borrowing, spending, and investment,” financial analyst and investor Jacob King, CEO of crypto newsletter WhaleWire, told X followers at the weekend. 

“Historically, sharp cuts have preceded recessions. Why? It shows the government is scared and scrambling to reverse an overreach.”

King specifically referenced the 2008 Global Financial Crisis as the elephant in the room.

“The warning signs today mirror those of 2008: rising unemployment, plummeting housing starts, falling home sales, and declining economic activity. Even the Fed funds rate chart looks eerily similar to 2007,” he concluded.

Others are eyeing Bitcoin’s close correlation to broader global liquidity conditions, these now on the rise, as grounds for optimism.

Popular trader Rickus is meanwhile among those preparing for a bullish BTC price reaction. In part of his own X analysis, he stated:

“If you think rate cuts somehow will cause a selloff on BTC this week then you might have another thing coming, It wont cause panic if there's no panic in the stock market in the 1st place- IF rate cuts happen then generally the 1st cuts can be very bullish actually and has been known to coincide with price rises depending the back drop.”

Rickus argued that macro conditions are “vastly different” to 2008.

BTC price behavior shows “uncanny” patterns

Since its most recent cycle low in late 2022, BTC/USD has been copying history with “uncanny” precision.

That is according to popular analyst Checkmate, creator of onchain data resource Checkonchain.

Uploading a chart of Bitcoin Index activity to X, Checkmate revealed a striking pattern to BTC price action since the pit of the last bear market.

BTC/USD closely resembles its recovery from cycle lows of the past, providing key context to a year that has seen complaints of sluggish performance.

“Uncanny. Bitcoin is in the exact same spot as the last two cycles since the low,” he summarized. 

“I prefer the cycle low comparison the most as it describes the psychological time it takes for investors to recover from a bear market. Upside measures are not relevant, but duration can be.”

Checkmate referenced another iteration of the Bitcoin price progress — that which measures activity between halving events. 

By that token, onchain analytics firm Glassnode shows the current cycle is something of an underperformer. 

Ether suffers as Bitcoin dominance taps 58%

Despite BTC price struggles, times are tough for Ether (ETH) in the current Bitcoin bull market.

Related: Bitcoin rally to $60K raises traders’ interest in FET, SUI, AAVE and INJ

Data shows the extent of the largest altcoin’s comparative weakness as ETH/BTC sets new multi-year lows.

The pair is currently languishing at levels not seen since April 2021, setting new lows of 0.0387 on Sept. 16.

Reacting, Alex Thorn, head of research at Galaxy Research, noted that the pair had lost over 50% since Ethereum’s Merge two years ago.

In turn, Bitcoin’s share of the overall crypto market cap continues to rise.

New highs of 58.07% came on Sept. 16, marking the most “Bitcoin-heavy” crypto market in three-and-a-half years.

“I'm expecting Bitcoin dominance to be peaking out in this area,” crypto trader, analyst and entrepreneur Michaël van de Poppe predicted. 

“All depending on $ETH, but it seems like we're close, given the current sentiment.”

Van de Poppe nonetheless sees both altcoins as having “bottomed out” and Bitcoin itself due a fresh all-time high as soon as next month.

“Gold is making new ATHs, and Bitcoin is expecting to follow that path,” part of another X post reads, referencing recent gold performance. 

“New ATH in October.”

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.