Bitcoin is making a run towards $112,000 as the odds of a Federal Reserve rate cut next week have soared to over 98%. This has boosted market confidence and spurred hopes for a more substantial rally.
Bitcoin's Price Momentum
Bitcoin's price is currently hovering around $111,742, marking a 0.5% increase in the last 24 hours. Over the past week, the cryptocurrency has gained 5%, fueling optimism that it could reach $120,000 amidst ongoing market consolidation. The broader cryptocurrency market has also experienced a modest rise of 0.48%, with altcoins like XRP, SOL, ADA, and DOGE showing slight gains.
Bitcoin has demonstrated resilience by holding above the crucial $110,000 support level. Overcoming the $112,000 resistance is seen as essential for Bitcoin to initiate a fresh uptrend, potentially paving the way toward $113,000 and beyond. Trader Crypto Caesar noted the retesting of the $112,000 resistance level, suggesting that a "clean break and close above it could confirm a bullish continuation toward $123K". Crypto investor Ted Pillows also expressed a similar sentiment, eyeing the $112,000-$114,000 zone, as a reclaim could push BTC above $118,000 soon.
Fed Rate Cut Expectations
Anticipation of a Federal Reserve rate cut is a significant factor driving the current market sentiment. The likelihood of a rate cut at the Fed's next meeting on October 29th is now at 98%, according to the CME FedWatch Tool. This expectation follows recent U.S. consumer inflation data indicating that inflation rose less than anticipated in September, both on a monthly and annual basis. The latest inflation figures, combined with signs of a slowing labor market, have reinforced market confidence that the central bank may cut rates again in December. Lower policy rates typically make riskier assets like Bitcoin and altcoins more attractive to investors.
Market Liquidity and Potential Rally
The anticipated Fed rate cut is expected to trigger market liquidity, which, in turn, could fuel a significant rally in Bitcoin's price. Analyst Michael van de Poppe believes that a likely Bitcoin price breakout is expected as soon as next week. Historically, digital assets have tended to offer positive returns in the fourth quarter of the year, further lifting market sentiment.
Factors to Consider
Despite the positive momentum, Bitcoin's trading volume fell more than 31% to $36 billion. Bitcoin ETFs have also experienced a net outflow of $90.60 million, marking three consecutive days of withdrawals. The $112,000 level remains a key resistance point. According to market experts, the muted trading activity could be due to the fact that the market has already priced in the US CPI data.
