Bitcoin's Volatility Hinges on Fed Moves and Altcoin Shifts

Bitcoin’s price continues to exhibit sharp fluctuations as traders monitor the Federal Reserve’s monetary policy decisions and market structure shifts. At press time, BTC was trading near $115,000 after dropping to a two-week low of $112,565 amid rising macroeconomic uncertainty. The recent volatility followed the Fed’s rate cut on September 17, which led to a sharp pullback as traders cashed in on the anticipated move. The market reacted with $147 million in liquidations in the past four hours, primarily affecting long positions. This was in line with historical trends where interest rate cuts often triggered short-term sell-offs before recovery phases, according to analysts.

Technical analysis of Bitcoin’s price movement indicated a cup-and-handle formation with resistance near $116,000 and support levels at $113,500 and $105,300. A confirmed close above $116,900 could have signaled a potential move toward $126,700, aligning with projections from the pattern. However, analysts warned that similar setups near record highs had previously led to false breakouts, especially when resistance was heavily positioned. The relative strength index (RSI) suggested that the market had not yet reached exhaustion, indicating room for continuation if momentum is sustained.

The Fed’s decision to cut rates by 25 basis points was largely priced in by the market, contributing to the muted response in both crypto and stock markets. While Bitcoin rebounded to $115,000 shortly after the announcement, the broader crypto market saw mixed performance, with a 0.57% decline in market cap in the past 24 hours. Major altcoins like XRP and TRX fell, while others such as ETH and BNB rose. The subdued reaction was attributed to the market having already accounted for the expected cut, mirroring the behavior seen in traditional equities such as the Nasdaq, which fell 1% following the rate announcement.

Analysts remain watchful of the Fed’s broader monetary outlook, particularly the expectation of two more 0.25% rate cuts in the coming months. The Fed dot plot indicated that 9 out of 19 members anticipate a reduction in October and December, with one member suggesting an aggressive 0.5% cut in September. The policy trajectory is expected to influence liquidity flows, with analysts estimating that Bitcoin’s volatility often reaches three to four times that of equities during rate shift periods. As the central bank continues to signal a more accommodative stance, the crypto market is likely to experience amplified swings, particularly if the Fed maintains its easing path.

In parallel, the altcoin market is showing early signs of a potential "altseason," a period characterized by a shift in capital from Bitcoin to smaller cryptocurrencies. Bitcoin’s dominance has fallen from a peak of 65% to around 58%, a pattern historically observed before major altcoin rallies in 2017 and 2021. Analysts identified a golden cross in the altcoin market cap, with the 50-day moving average crossing above the 200-day, a setup previously linked to explosive gains during previous cycles. Furthermore, the $OTHERS.D metric, which excludes Bitcoin and Ethereum, is retesting a 2014 trendline, a technical signal often followed by multi-month rallies. These developments suggest that capital rotation into altcoins may be accelerating, setting the stage for a broader market expansion.

The upcoming Fed meeting and Chair Jerome Powell’s Jackson Hole speech remain key near-term catalysts for Bitcoin’s price trajectory. Traders are closely watching for signals that could influence the timing and magnitude of rate cuts, which will ultimately shape risk-on sentiment. If Bitcoin holds above $113,500, the bullish technical structure remains intact, supporting a potential move toward $126,000. However, any breakdown below that level could expose the market to deeper corrections. As volatility continues to dominate the landscape, the interplay between macroeconomic policy and technical levels will remain central to Bitcoin’s near-term direction.