The post Can Bitcoin Price Overcome Bearish Pressure Amid Upcoming FED Rate Cuts? appeared first on Coinpedia Fintech News
The latest CPI reported unexpectedly low U.S. inflation. Core inflation fell 0.1 percent from 3.4 percent to 3.3 percent in June, the first drop in almost four years. Analysts see this as a bullish signal for Bitcoin, but the price isn’t rising. If the US central bank cuts interest rates, discouraging fixed-income investments, people will look for investments with higher returns.
Markus Thielen, an analyst at 10x Research, predicted a Bitcoin rally leading up to the U.S. inflation announcement, expecting a decline in inflation. Although Bitcoin surged briefly post-CPI announcement, it quickly sold off, even with the high probability of a September rate cut.
Let’s analyze this bull theory.
Betting Against Consensus
The report delved into the fact that success in financial markets often involves betting against consensus and being correct. The post-CPI surge was short-lived since markets expected lower inflation. Identifying market upturns is key. The first scenario can result in large gains, and the second scenario can result in large losses.
Following the latest inflation numbers, the odds for a September rate cut rose to 87% and the odds for two or more Federal Reserve rate cuts by November rose to over 50%. This, together with a nearly 1% drop in the U.S. dollar index, suggests Bitcoin may rise again.
Analysts see this as a perfect time to invest in Bitcoin as several factors are supporting the sentiments.
Key Catalysts
Even though the selling pressure from the German government is easing, Bitcoin appears technically oversold. With ETFs buying the dip and the Fed expected to cut interest rates soon, liquidity support is anticipated. However, potential selling from Grayscale could offset inflows into Ethereum ETFs from other issuers, and Mt. Gox selling pressure could materialize when Bitgo initiates payouts by July 24.
Plus, the potential $16 billion in FTX creditor payouts, with around $3.2 to $5 billion possibly returning to crypto assets, adds another layer of complexity. Despite these factors, the combination of easing selling pressure, ETF activity, and expected Fed rate cuts suggests the potential for Bitcoin’s price to rise leading up to the anticipated rate cut.
Bitcoin Price
In a bull market, Bitcoin is battling like a bear. RSI is 48.30 at $57,412. After hitting resistance at $59,500, it fell 3.87% and is back in a triangle formation, indicating bear control. Investors worried about the $1.1 trillion market cap drop. Big BTC holders are purchasing more while retail investors sell. After the German government sells BTC and Mt. Gox repayments, the market may rebound in 1-2 months, hopefully by Q3.