Bitcoin News Today: Bitcoin's Fate May Hinge on Fed's Next Move

Bitcoin stands at a pivotal juncture as the U.S. labor market shows early signs of strain and the Federal Reserve is widely expected to begin a series of rate cuts. The recent August nonfarm payroll report revealed only 22,000 jobs were added, significantly below the anticipated 75,000, while the unemployment rate climbed to 4.3%, the highest since 2021. These developments have led to market expectations that the Fed will announce its first rate cut in September, with the probability of a 0.25% or even a 0.5% reduction gaining traction [1].

The anticipated easing of monetary policy could reshape the liquidity environment for risk assets, including cryptocurrencies. Historically, non-recessionary rate cuts have supported equities and crypto, as lower yields and borrowing costs encourage investment and speculative activity. For Bitcoin, the timing of this macroeconomic backdrop aligns with a technical consolidation phase. The BTC/USD pair is trading just above 111,000, with Bollinger Bands indicating a narrowing of volatility and the 20-day moving average still trending downward. A sustained move above 113,000 could signal a renewed bullish momentum, opening the door for a test of the 115,000–116,000 level [1].

The broader economic calendar for the week ahead includes several key inflation reports that will further shape the Fed’s policy outlook. The Producer Price Index (PPI), released on Wednesday, and the Consumer Price Index (CPI), published on Thursday, are expected to provide insights into pricing trends across the economy. These metrics are crucial as they directly influence central bank decisions and investor sentiment. Additionally, preliminary readings on consumer sentiment and inflation expectations will be released on Friday. Bank of America economists predict a rise in year-on-year CPI from 2.7% to 2.9%, the highest since July 2024 [2].

From a medium-term perspective, the anticipated rate cuts are expected to drive increased liquidity, potentially benefiting risk assets. With the approval of spot Bitcoin and Ethereum ETFs, institutional investors have a direct on-ramp into the crypto market. Furthermore, the $7.2 trillion in money market funds could see outflows as Treasury yields decline. If even a fraction of this capital flows into cryptocurrencies, it could propel Bitcoin and altcoins to new highs [3].

However, the long-term outlook carries risks. The inflationary impact of tariffs imposed earlier in the year is expected to become more evident by early 2026, potentially forcing the Fed to reconsider its easing path. Should inflation rise while unemployment remains elevated, the Fed may pause or reverse its rate cuts, increasing the risk of stagflation. Such a scenario could mark the end of the current economic cycle and trigger a bearish shift in crypto markets [3].

As the Fed meeting on September 17 approaches, market participants are closely watching for signals that could confirm or alter the expected course of monetary policy. A surprise 0.5% cut would likely boost risk appetite, while a slower-than-anticipated easing could prolong uncertainty. Meanwhile, Bitcoin remains in a critical consolidation phase, with key support and resistance levels poised to define the next major price movement. The coming weeks will be essential in determining whether the macroeconomic environment will support a sustained rally or if volatility will continue to dominate the landscape [1].

Source:

[1] Fed Rate Cuts Incoming: Can Bitcoin Smash Through 120K? (https://cryptoticker.io/en/fed-rate-cuts-incoming-can-bitcoin-smash-through-120k/)

[2] 3 Things That Could Influence Crypto Markets in Big Week for Inflation Data (https://cryptopotato.com/3-things-that-could-influence-crypto-markets-in-big-week-for-inflation-data/)

[3] US economic data disappoints again, leaving the crypto ... (https://www.panewslab.com/en/articles/12b22c51-d1e5-4468-92da-461df252197e)