On September 19, Bitcoin attempted to convert the $62,000 level into support as the market digested news of a rare 0.5% interest rate cut from the US Federal Reserve.
BTC/USD 4-hour chart. Source: TradingView
BTC Price Hits Three-Week High as Fed Cuts Sharply
Data from TinTucBitcoin Markets Pro and TradingView tracked Bitcoin (BTC) price strength during the Asian trading session.
The local high hit $62,600 after the Fed's move, marking the third time in history that a rate cut cycle began with a 0.5% cut.
This has led to liquidations of BTC short positions on exchange Order Book books. Data from tracker CoinGlass shows a total of $128 million in liquidations in the 24 hours to press time.
“We need to reduce leverage or take profits now,” they informed Watcher on X in a later analysis, warning them not to “get too excited.”
BTC liquidation heat map (screenshot). Source: CoinGlass
Previously, TinTucBitcoin reported on a BTC price prediction that called for $64,000 in the event of a 0.5% cut, but this ultimately proved to be too much for the bulls as there was significant resistance above.
“Bitcoin is slowly breaking through resistance,” popular trader Jelle reported on X.
“Above $62,500, things will get much better, and stops above $65,000 will no longer be safe. Late September will be interesting.”
US Dollar Index (DXY) 1-hour chart. Source: TradingView
Meanwhile, the US dollar has seen some strong volatility, with the US dollar index (DXY) also initially rising before giving up gains to return to previous support levels.
“Sitting on the edge of support. A break could lead to a strong move towards 96,” popular trader Aksel Kibar responded in his latest DXY analysis on X.
US Dollar Index (DXY) 1-month chart. Source: Aksel Kibar/X
For Arthur Hayes, former CEO of cryptocurrency exchange BitMEX, attention is now focused on the Bank of Japan’s interest rate decision on September 20.
The strength of the yen, he said, will affect BTC price performance.
Source: Arthur Hayes
“Something is not right”
However, looking further afield, trading resource The Kobeissi Letter has issued a clear warning to traders of risky assets.
While it may seem like it's boosting liquidation, rate cut cycles that start with a 0.5% cut ultimately result in losses for US stocks.
“In 2001, the market fell 31% in 2 years and in 2007, the market fell 26% in 2 years. These were major crises,” a Chain X piece recalled .
Kobeissi compared the Fed's optimistic message to the scale of its policy adjustment, suggesting there is a contradiction at play.
“If the Fed only started with 50 basis point cuts during crises, why start with 50 bps this time?” they asked.
“The Fed keeps saying the economy is strong and they’re calling for a soft landing. But their policy decisions are like we’re in a recession. Something’s not right here.”
Probability of Fed's target interest rate. Source: CME Group
Data from CME Group shows that a further 0.5% cut is less likely than a smaller 0.25% cut at the Fed's next meeting on November 7.
This article does not contain investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research when making a decision.
