Bitcoin (BTC) has seen a significant downturn following the Federal Reserve’s recent interest rate cut, triggering a crucial technical indicator that has historically signified the end of price corrections.
What Did the Fed Announce About Rate Cuts?
On Wednesday, the Fed lowered its benchmark borrowing rate as expected but conveyed intentions to implement only two cuts next year, a reduction from the previously anticipated four cuts for 2025.
How Did Bitcoin React to Market Changes?
As a direct response to the Fed’s announcement, Bitcoin’s value plummeted by over 8%, reaching around $96,000 at its lowest point. Currently, the cryptocurrency is trading near $97,500, marking a nearly 10% drop from its peak of $108,266 earlier this week.
This decline has triggered a bearish crossover, where the 50-hour simple moving average (SMA) dipped below the 200-hour SMA. While this pattern suggests a potential deepening of the correction, it didn’t follow the expected course during the previous bull market.
Traders have seen Bitcoin undergo several corrections during its surge from $70,000 to over $100,000 since the U.S. elections, with each drop culminating in a similar bearish crossover pattern. The recent crossover, however, might spark hope among bulls for a rebound back above six figures.
- The Fed’s interest rate cut led to an approximately 10% decline in BTC.
- Technical indicators point towards a possibility of continued downtrend.
- A potential recovery could encounter resistance near $10,600.
Market participants are advised to tread carefully as they navigate the complexities of the current landscape, keeping a close watch on price levels and technical signals. The situation remains fluid, and a break below $96,000 could lead to lower levels reminiscent of previous market lows.