Bitcoin’s 6-Month Consolidation Could Break With Upcoming Fed Rate Cut

Key Takeaways

• Fed’s rate cut divided between 50 bps and 25 bps.
• A larger cut could boost high-risk assets like Bitcoin.
• Bitcoin is in a transitional phase and is awaiting breakout confirmation.

The U.S. Federal Reserve is expected  to lower interest rates on Wednesday, Sept. 18, but the market is divided over the extent. The CME Fed Watch tool shows a 65% chance for a 50 basis point cut and 35% for a 25 bps cut. 

However, most analysts believe a larger cut could benefit high-risk assets like crypto. Lark Davis , a crypto YouTuber, noted Bitcoin surged after the last rate cut and predicts potential gains. 

With Bitcoin being in a consolidation phase since March, is this the catalyst for another bull run? 

Old Bitcoin Cycles Offer Mixed Signals 

In a recent CryptoQuant QuickTake  post, CryptoHell highlighted Bitcoin‘s bull-bear market cycle indicator as a reliable tool for tracking market trends. 

The indicator alternates between the “Overheated Bull” (overbought) and “Extreme Bear” (oversold) phases. As of 2024, Bitcoin is in a “transitional phase,” showing early signs of recovery. 

However, whether this marks the start of a full bull market is uncertain. The analyst emphasized that market sentiment and volatility heavily influence Bitcoin’s price movement. However, compared to the previous times the BTC bull-bear market cycle indicator was in this area, it looks like a more decisive downside ahead. 

BTC Price Analysis: Consolidation Phase Coming to an End 

Since reaching its all-time high of $73,770 in mid-March, Bitcoin has been in a descending channel. On Aug. 5, it dipped slightly below $50,000 and quickly snapped back up, closing the daily candle above $54,000.

This was a bullish sign and the point from which the price could have started a bullish phase, but this possibility was invalidated as it failed to form a five-wave pattern. 

On Sept. 6, it revisited the $53,000 area, testing whether support was present. A bounce caused another increase to $61,400, an interaction with the descending resistance, now confirmed by the third interaction. 

An ascending support line has yet to be confirmed, as only two points form it. Still, it appears BTC has been in a symmetrical triangle since Aug. 5. As the price approaches its apex, the breakout direction will dictate the future outlook. 

Overall, Bitcoin’s consolidation phase is ending, but now, the outlook looks more bearish than bullish. Despite the current outlook, we can expect to see some upside attempts, whose momentum will prove whether BTC has the strength to continue its bull cycle. 

About the Author

Nikola Lazic

Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis. Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information. Expertise: Cryptocurrencies, Technical analysis, Elliott Wave Theory, On-chain metrics, Research reports.

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