[Comparative to Daily Market News] The Federal Reserve's interest rate decision is approaching, and BTC challenges the resistance level of 59,000 US dollars

Thursday, USNew inflation and labor data further support expectations that the Federal Reserve will start cutting interest rates next week, financeAsset prices are trending higher.

The US Producer Price Index (PPI) report for August showed that wholesale prices rose 0.2% month-on-month, slightly higher than economists' expectations, while rising 1.7% year over year, in line with expectations.

Currently, the market generally expects the Federal Reserve to cut interest rates by 25 basis points next week, but some traders still hope to cut interest rates by 50 basis points. The Chicago Mercantile Exchange (CME) US Federal Reserve Watch Tool (FedWatch Tool) suggests a 50 BP rate cut probability of 28%, up from 14% yesterday.

The three major US stock indexes closed higher, with the S&P, Dow Jones, and Nasdaq up 0.75%, 0.58%, and 1.00%, respectively. Spot gold surged 1.91% intraday to a record high of just under $2,560 an ounce.

Comparative data showed that Bitcoin (BTC) surged above $58,000 in early Thursday trading, and after falling to a low of $57,310 in midday trading, the bulls successfully pushed the price back above $58,000 in the afternoon, challenging the $59,000 resistance level.

At press time, Bitcoin was trading at $58,217, a 24-hour increase of 1.53%.

In the altcoin market, the top 200 tokens by market capitalization generally rose. The biggest increase was Worldcoin (WLD), which reached 14.6%; followed by Trust Wallet Token (TWT), which rose 14.3%; and Sui (SUI), which rose 13.9%. The biggest decline was GMT (GMT), which fell 6.2%; SuperVerse fell 5%; and ConstitutionDAO (PEOPLE) fell 4.3%.

Currently, the overall market value of cryptocurrencies is 2.05 trillion US dollars, and Bitcoin's market share is 56.3%.

Expected fluctuations

Market analyst Bloodgood said,The CPI and PPI inflation data released this week are not much different from the forecast. The Federal Reserve seems to be about to enter a fairly orderly cycle of interest rate cuts, which should be very beneficial to risk assets.

Bloodgood notes that from a historical perspective, interest rate cuts “are often accompanied by some initial downward fluctuations, but considering the upcoming elections, this fluctuation should abate. Unless there are some truly unexpected economic developments, the macro outlook for the fourth quarter is still bullish from a fundamental standpoint.”

Regarding Bitcoin,BloodgoodIt was pointed out that since last week, the price of Bitcoin has fallen to around $50,000, but the bulls have stepped in to “save the situation” because this time “the pullback was not as fast as in early August, which indicates that the bears are exhausted.”

Bloodgood concluded:“At the time of writing, BTC is below the breakout zone, which is a key point in recent trends. Breaking through this level will quickly lead to higher levels, and falling below will take place within the next few weeksVery likely to test$5 million. From TA's perspective, the structure is still bearish, so I'm not hopeful until the lower high is broken.”

TradingView analyst TradingShot said that interest rate cuts will lead to an increase in the global money supply, which may be the factor driving the next round of Bitcoin's rise.

TradingShot said, “As the Federal Reserve prepares to cut interest rates next week for the first time since starting the rate hike cycle in February 2022, it will be very exciting to see what the global money supply and more currencies in circulation mean for Bitcoin. ”

In the image above, the light green and red candles (top) indicate the Global Liquidity Index (GLI), composed of the Federal Reserve, TGA, RRP, the European Central Bank, the People's Bank of China, the Bank of Japan, the Bank of England, and other central banks. The icon tracks and measures liquidity/money supply/currency in circulation in the global economy.

TradingShot said, “When central banks cut interest rates, they are actually issuing more money and injecting large amounts of cash into the system, causing the currency in circulation to depreciate. When this happens, it's easier for businesses and/or individuals to get more capital through loans, etc., which increases their ability to spend/buy/invest. In principle, this means it's easier for investors to buy riskier assets, leading to an increase in value. Stocks and cryptocurrencies fall into this category.”

TradingShot analysis said:“As this chart shows, Bitcoin (the candle at the bottom) rises every time GLI starts to rise, which isn't surprising; more specifically, when liquidity declines and stabilizes, a BTC bear cycle forms, and when it breaks through resistance, BTC begins the rebound phase of its bull cycle. After the Federal Reserve's sharp rate hike brought us back to the level before the 2008 housing crisis, GLI experienced an even stronger decline. Instead of leveling off, it formed a wedge with lower highs as resistance. GLI is now at exactly this lower high trend line, and if broken through, we may have a breakout similar to the previous cyclical resistance breakout, triggering Bitcoin's parabolic rebound.”

Secure Digital Markets analysts believe that Bitcoin has rebounded from the $56,600 support level, a trend consistent with the bullish crossover observed on the 4-hour chart, which intersects the 20-day and 50-day exponential moving averages (EMA). Furthermore, oscillators in the same time frame showed a bullish divergence, indicating a possible upward reversal in the short term. But while technical indicators can provide insight into trends, these alone aren't enough to accurately predict future trends, and it remains to be seen whether the rebound will push Bitcoin past the $60,000 mark and reach the upper limit of the six-month trading range.

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