Bitcoin's Near-Term Bearish Outlook: Macroeconomic and Technical Indicators Signal Deeper Correction

Macroeconomic Headwinds: Fed Policy and Inflation Dynamics

The Federal Reserve's monetary policy remains a pivotal driver of Bitcoin's near-term trajectory. In Q3 2025, the Fed cut the federal funds rate by 0.25 percentage points, bringing it to a range of 4%–4.25%—the first reduction since December 2024Federal Reserve lowers interest rates by 0.25 percentage points in Q3 2025^[1]. This decision, coupled with projections of two additional rate cuts in 2025, reflects a response to a cooling labor market and slowing economic growthHow Interest Rates, Inflation, and the US Dollar Affect Crypto in 2025^[5]. However, inflation remains stubbornly above the Fed's 2% target, with the Personal Consumption Expenditures (PCE) index forecasted at 3% for 2025Federal Reserve cuts key rate for first time this year^[2].

Bitcoin's historical role as an inflation hedge has been tested in this environment. While the asset surged to $120,000 amid a 4.2% inflation spike in early 2025How Do Macroeconomic Factors Like Fed Policy and Inflation Affect Crypto?^[4], the subsequent rate cuts have weakened its appeal as a store of value. A stronger U.S. dollar, often correlated with tighter monetary policy, has also dampened demand for Bitcoin among international investorsHow Interest Rates, Inflation, and the US Dollar Affect Crypto in 2025^[5]. Meanwhile, the S&P 500's volatility has shown a 0.78 correlation with major crypto price swings, underscoring growing interdependencies between traditional and digital asset marketsHow Do Macroeconomic Factors Like Fed Policy and Inflation Affect Crypto?^[4].

Technical Deterioration: Death Cross and Oversold RSI

Technical indicators reinforce a bearish outlook. Bitcoin's price has fallen below both the 50-day and 200-day moving averages, forming a “death cross” pattern—a historically bearish signalFederal Reserve lowers interest rates by 0.25 percentage points in Q3 2025^[1]. The 50-day simple moving average (SMA) has transitioned into resistance, while the 200-day SMA remains a critical support level. Short-term moving averages in September 2025 remain in sell territory, emphasizing near-term weaknessBitcoin (BTC) Price: Trading Range of $108,000–$125,000 Expected for September 2025^[6].

The Relative Strength Index (RSI) has dipped into the mid-30s, nearing oversold territory, though a bullish divergence suggests bearish momentum may be waningFederal Reserve lowers interest rates by 0.25 percentage points in Q3 2025^[1]. Bitcoin's trading range of $108,000–$125,000 highlights volatility, with the $100,000 level acting as a psychological floorBitcoin (BTC) Price: Trading Range of $108,000–$125,000 Expected for September 2025^[6]. While long-term moving averages hint at potential for a bounce, the immediate technical setup favors further downward pressure. Historical backtests of RSI-oversold entries in Bitcoin from 2022 to 2025 reveal mixed outcomes. Buying Bitcoin when RSI fell below 30 and holding for 30 trading days generated an average return of +3.53%, marginally outperforming the buy-and-hold benchmark. However, the win rate climbed to approximately 63% by day 23, with the strongest performance observed around day 17. Despite these figures, the edge remains statistically weak and inconsistent, suggesting that RSI alone may not be a reliable signal for timing market rebounds.

Institutional Optimism vs. Market Realities

Despite bullish narratives around institutional adoption—such as MicroStrategy's Bitcoin holdings and $160 billion in Bitcoin ETF assets under management—the market remains vulnerable to macroeconomic headwindsFederal Reserve cuts key rate for first time this year^[2]. Regulatory clarity, including the U.S. GENIUS Act and SEC's Project Crypto, has reduced headline riskBitcoin Price Predictions 2025: Analysts Forecast $145K to $1M^[3], but these developments have yet to offset broader market dynamics.

Conclusion: A Correction Looms

Bitcoin's near-term outlook is clouded by a confluence of macroeconomic and technical factors. The Fed's rate cuts, while signaling a shift in policy, have not alleviated inflationary pressures or restored investor confidence in risk assets. Technically, the death cross and oversold RSI suggest a deeper correction is likely, with $100,000 as a critical support level. While long-term fundamentals remain intact, investors should brace for volatility and prioritize risk management in the coming months.