Bitcoin's Range Battle: Fed Watch, Stablecoin Surge, and the $110K Crucible

Bitcoin's price remained range-bound near $110,000 in the wake of the U.S. August nonfarm payrolls report, which showed a weak 22,000 jobs added—far below the expected 75,000—sparking renewed speculation about a Federal Reserve rate cut. The CME FedWatch Tool indicated a 100% probability of a rate cut ahead of the September 17 meeting, with a 10% chance of a larger 50-basis-point reduction. Despite the softer economic data, Bitcoin’s price did not surge as expected, with analysts attributing this to market anticipation of policy easing and ongoing profit-taking by institutional investors.

Rachael Lucas, crypto analyst at BTC Markets, noted that the combination of already priced-in rate cut expectations and flat ETF flows limited Bitcoin's upward momentum. The market, however, continues to watch key support and resistance levels. The $110,000 level remains a critical support point, while resistance sits at $113,400, with further levels at $115,400 and $117,100. Breaking through these levels could signal that the market has absorbed recent selling pressure and may retest highs.

The bearish technical outlook was reinforced by a double top breakdown on Bitcoin’s daily chart, with prices slipping below the $111,982 neckline. This breakdown validated a broader downtrend, with the first line of support located around $101,700—corresponding to the 200-day simple moving average (SMA). The pattern mirrored a similar formation in early August, which led to a significant sell-off pushing prices down toward $75,000.

Analysts also highlighted the role of stablecoin supply as a potential catalyst for future rallies. The supply of stablecoins, such as USDT and USDC, is near record highs, offering a pool of liquidity that could fuel further price increases if market conditions align. Additionally, declining exchange balances for Bitcoin and Ethereum indicated easing near-term selling pressure, a factor that could support a stronger market recovery.

The broader macroeconomic environment, however, remains mixed. While a Fed rate cut could stimulate risk appetite, it could also signal economic weakness, which might dampen investor enthusiasm. Vincent Liu of Kronos Research emphasized that without stronger ETF inflows or broader liquidity expansion, Bitcoin may struggle to break through the $120,000 barrier. Furthermore, the upcoming August CPI data, expected to show stickier inflation, could complicate the Fed’s decision-making process and add volatility to Treasury yields, indirectly affecting Bitcoin.

Despite these uncertainties, some market observers remain cautiously optimistic about the fourth-quarter potential for Bitcoin. The confluence of expanding global liquidity, a robust stablecoin supply, and a delayed correlation with gold—all key indicators of market sentiment—suggest that Bitcoin may remain in a consolidation phase until mid-November. If gold continues its upward trajectory and stablecoin issuance remains strong, Bitcoin could see a significant price surge toward the end of the year.