Bitcoin Trapped in Tight Range as Fed Easing Hopes and Profit-Taking Cancel Out

Bitcoin’s price has remained tightly consolidated around $110,000 amid elevated expectations of a Federal Reserve rate cut scheduled for September 17. Despite the August U.S. nonfarm payrolls report showing a weaker-than-expected 22,000 jobs created, significantly below the projected 75,000, Bitcoin has not shown significant upward momentum. The CME FedWatch tool currently assigns a 100% probability to a rate cut, with a 10% chance of a 50-basis-point reduction. However, analysts argue that much of this easing expectation is already priced in, and institutional profit-taking has further capped price movement.

Bitcoin is currently trading near $111,000, having seen limited reaction to the softer jobs data and broader macroeconomic developments. According to crypto analyst Rachael Lucas of BTC Markets, the subdued movement reflects a balance between dovish Fed expectations and profit-taking by institutional players, as well as flat ETF inflows. This combination has left Bitcoin in a narrow trading range, with key support at $110,000 and initial resistance at $113,400. Lucas also highlighted that breaking above these levels could signal renewed bullish momentum, indicating that the market has absorbed recent selling pressure.

The broader market environment also shows mixed signals. While the U.S. economy appears to be cooling, with the unemployment rate rising to 4.3% in August, volatility indicators such as the VIX index and its October futures suggest that market uncertainty could rise after the Fed’s decision. Greg Magadini of Amberdata noted that the VIX futures spread has widened to an extreme 2.2%, signaling that traders are pricing in less risk ahead of the meeting but anticipating heightened volatility afterward. This volatility could spill over into Bitcoin, which has historically moved in tandem with equity markets.

Bitcoin’s volatility indices, including BVIV and DVOL, have recently aligned closely with the VIX, reinforcing its integration into broader financial market dynamics. Additionally, on-chain data suggests that stablecoin supply remains at record highs, providing a potential reservoir of capital for a future rally. Meanwhile, declining exchange balances for Bitcoin and Ethereum indicate reduced near-term selling pressure. Regulatory developments, particularly from the SEC and CFTC, are also expected to influence market sentiment in the coming months.

Despite the near-term consolidation, some analysts remain optimistic about a potential Q4 rally to $185,000, driven by macroeconomic easing and continued institutional interest. However, this outcome will depend on several factors, including stronger ETF inflows and broader liquidity expansion. Vincent Liu of Kronos Research cautioned that without these elements, the $120,000 level remains a formidable barrier. The upcoming U.S. CPI and PPI reports will also play a critical role in shaping the Fed’s policy trajectory, as investors continue to assess the balance between economic growth and inflation.