Bitcoin's projected surge: Aiming for a breakthrough at $126K as Fed rate reduction apprehensions rise
Bitcoin, the world's leading cryptocurrency, is gearing up for a significant move following the anticipated Federal Reserve interest rate cut. The rate cut, driven by 3.1% inflation and 4.3% unemployment, is expected to have a profound impact on Bitcoin's near-term direction.
Historical patterns suggest that rate cuts often trigger brief sell-offs before recovery in Bitcoin. As such, traders should prepare for possible dips toward $104,000-$111,000 before a sustained rally. However, if Bitcoin can hold above the immediate support at $113,500, reinforced by the 20-day and 50-day EMAs, medium-term momentum is expected to stay constructive.
The current price of Bitcoin stands at approximately $115,877, having found support around this level after bouncing from the $111,000 zone. Notably, the 0.618 Fibonacci retracement level at $115,429 is acting as a critical support for Bitcoin.
A key factor in Bitcoin's potential movement is the cup and handle pattern on the 4-hour timeframe, which is nearing a potential breakout. If Bitcoin can clear the resistance at $116,000, it could potentially lead to a push toward $123,600. Overcoming these resistance levels could determine Bitcoin's continuation of its upward trend.
Analyst Merlijn The Trader has been credited for predicting the Cup & Handle pattern for Bitcoin. If Bitcoin breaks above $116,900, a potential target of $126,700 could be within reach. On the other hand, failure to clear the resistance at $116,000 may lead to a short-term pullback for Bitcoin.
It's important to note that Bitcoin's volatility can spike 3-4 times higher than equities during policy changes, reinforcing the risk of short-term price swings ahead of the Fed decision. This rate cut could cause Bitcoin to dip temporarily to $104,000 or potentially toward $92,000.
Key resistance levels for Bitcoin are $116,000, $118,000, $120,000, and $123,600. If these levels are overcome and support holds, a historic $126K breakout remains within reach. As Bitcoin navigates these potential price movements, traders should keep a close eye on these key levels and be prepared for the anticipated volatility.
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