Bitcoin rose to a fresh 6-week high of 117.9k following the Federal Reserve interest rate decision, as the price grinds very slowly higher. Meanwhile, altcoins are experiencing a stronger rally with Ethereum + 2.5%, Solana trades 3.5% higher, and Avalanche has jumped 9%. The cryptocurrency market capitalisation has risen 1.49% over the past 24 hours to $4.11 trillion.
Gains in the crypto market come after the Federal Reserve cut interest rates by 25 basis points yesterday to 4% – 4.25%, in line with expectations. The central bank also pointed to steady rate cuts across the remainder of the year, plotting two 25 basis point reductions by the end of 2025, pushing the target rate down to 3.5%-3.75% from 4%-4.25% forecast in June, in line with market pricing. However, while Fed Powell noted that the rate reductions were to support the weaker jobs market, policymakers lifted growth forecasts for this year to 1.6% from 1.4% and left inflation forecasts unchanged at 3.1% in 2025, which is slightly mixed messaging.
Immediately following the decision, BTC briefly spiked lower to 114.7k before rebounding to current levels of 117.3k. The USD also dropped to its weakest level since February 2022 before reversing higher, and the S&P 500 slipped to 6550 before recovering. US futures are now trading at record highs ahead of the open today. Overall, the dot plot leaned dovish, signaling the Fed is open to cutting rates further if conditions require it.
Barchart has noted that when the Fed cuts rates within 2% of stock markets at record high, the S&P 500 has typically risen 100% of the time over the next 12 months, averaging a 14% gain. Crypto will also be watching liquidity flows. Lower interest rates and the prospect of more easing mean more liquidity and a potential boon for crypto prices as well as equities.
September is historically a red month for Bitcoin. However, with two weeks to go this month is shaping up to be one of the rare exceptions, which could bode well for the outlook. The years that September has been positive see an even more bullish October.
October is typically one of Bitcoin’s strongest months. Across its 16-year history, only four Octobers have seen negative returns. Most of the 12 months that posted gains saw double-digit gains, pointing to a strong seasonal tailwind.
The risk here is that the Fed is cutting while inflation is still at 2.9%. If inflation remains sticky and the Fed cuts too aggressively, this could risk CPI rising further and the Fed losing credibility around its fight with inflation.
Separately, Altcoin Season has officially arrived with the ASI above 80 and Bitcoin dominance at 57%. A risk to Bitcoin’s outlook could simply be the flow of capital into altcoins such as Solana, Doge, and Avalanche, which have outperformed in recent weeks.
Bitcoin extended its recovery from the 107.2k September low, rising above resistance at 112k and the 50 SMA to a peak of 117.9k, which, along with the RSI above 50, keeps bulls hopeful of further gains.
Buyers will look towards 120k as the next level of resistance before bringing 124.4k and fresh all-time highs into focus.
Immediate support is at 114.5k, the 50 SMA, and below, 110k comes into play. It would take a break below 107.2k to create a lower low.
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