Fed’s Super-Cut Fuels the BTC Rocket. Do We Have Lift Off?
One More Breakout Attempt: Is This the Descending Channel’s Last Fight?
The Fed finally did it and after two years of tight monetary policy, they decided to deliver a massive 50-bps cut instead of the more tame option of just trimming 25 bps. This implies that the main war against the high inflation has been won but of course, other minor battles still need winning.
We will see what impact this 50-bps cut will have on the U.S. economy but it was showing signs of health even before the loosening of the rate. So, now, with cheaper money, the economy is likely to pick up. It looks like the desirable “soft landing” was achieved but the Fed is likely going to jump through a few more hoops before declaring victory.
But the real winner looks to be Bitcoin because while the US Dollar Index (DXY) had a mixed reaction to the cut, Bitcoin (BTC/USD) rallied immediately after the rate cut announcement, adding more gains to a bullish move that started a day prior.
Tuesday’s close was around $60,300 and Wednesday after the rate announcement and press conference, Bitcoin climbed as high as $61,780 and closed the day very close to that, at $61,750. A daily candle that closes very near to the highest price of the day, suggests heavy bullish pressure. This pressure was confirmed when the next day, BTC/USD pushed to $63,800, closing at $62,900.
Chart Analysis – BTC/USD
The pair is now facing a major hurdle but also one that – if surpassed – could shape the next medium-term move: the upper barrier of the descending channel.
Since the ATH reached in March, this channel contained the pair almost perfectly, with a few exceptions in the form of false breakouts. Now the channel is tested again but this time it may be even harder to break because the upper line of the channel and the resistance at $63,600 are in close vicinity, forming a confluence zone.
This means that if – and that’s a big “if” – Bitcoin bulls manage to take the price above this confluence zone, it will be a show of strength and will be probably followed by an influx of more buyers.
The Relative Strength Index is moving up after a bounce at its 50 level, which is usually a bullish sign that supports the breakout scenario. It’s worth noting that the RSI is not yet overbought, so it favors an extended move that may likely break the channel boundary.
