Bitcoin (BTC) may experience significant price fluctuations this week as expectations rise for the Federal Reserve (Fed) to lower the US interest rate by a minimum of 25 basis points (bps), according to the most recent report from Bitfinex Alpha.
The extent of Bitcoin’s price movement will largely depend on whether the Fed opts for a cut of 25 bps or a more substantial 50 bps. A smaller reduction could foster “bullish optimism,” while a larger cut might compel investors to adopt a “cautious de-risking” approach.
Analysts from Bitfinex indicated that any potential volatility may be reflected in the inflows of both spot Bitcoin exchange-traded funds (ETFs) and derivatives markets.
Additionally, rate reductions tend to precede sell-offs in equities and other risk-oriented assets, contributing to a more cautious outlook among investors. However, the report emphasizes that previous trends can offer insights but do not guarantee future performance.
Positive Indicators on the Horizon
From a price action perspective, Bitfinex analysts noted the possibility of a local bottom forming around $52,756 after Bitcoin plummeted to that level on September 6, followed by a swift rebound of over 15%.
This recovery was accompanied by a notable uptick in inflows to US-based spot Bitcoin ETFs, which accumulated $403.9 million after experiencing a decline of nearly $1 billion over the previous two weeks.
Interestingly, the resurgence of ETF inflows coincided with an increase in the S&P 500 index, indicating a rising investor sentiment towards riskier assets, despite the impending volatility.
The report also highlighted that the recent rises in Bitcoin’s price were primarily driven by buying in the spot market, rather than futures or perpetual contracts. This is corroborated by the Spot Cumulative Volume Delta (CVD) data, which indicates consistent upward momentum since Bitcoin fell below $53,000 earlier this month.
Testing Resistance: $60,000 – $61,000 Range
Complicating Bitcoin’s short-term price trajectory, Bitfinex warns that BTC is nearing a critical resistance zone between $60,500 and $61,000, a significant threshold since early March.
The report also observed a 14% increase in total Bitcoin Open Interest across perpetual trading pairs since the sub-$53,000 phase, aligning with recent price shifts.
If Bitcoin fails to breach the $61,000 resistance level during a week characterized by high volatility, traders and investors should brace themselves for potential rapid and substantial price changes in the near term.
