Currently, investors are closely monitoring the possibility of a Federal Reserve interest rate cut and its potential impact on the value of major assets like Bitcoin (BTC). Bitcoin recently experienced a decline below $60,000 due to concerns about the overall economic health. The expected rate cuts are seen as a significant move, particularly amid fears of a recession.
An expert in cryptocurrency trading, Trading Shot, highlighted in a recent TradingView post on September 11 possible scenarios for Bitcoin based on the correlation between the Global Liquidity Index (GLI) and its price movement. The GLI represents projections tracking major central banks such as the Federal Reserve, European Central Bank, People’s Bank of China, Bank of Japan, and Bank of England.
Historically, when central banks reduce interest rates, they inject more money into the economy, leading to currency devaluation. This stimulates more borrowing for both corporations and individuals, increasing spending, purchasing, and investment capabilities. Riskier assets like cryptocurrencies typically see a rise in value with increased liquidity.
The analyst also discussed significant breakouts in the GLI that have historically resulted in Bitcoin rallies. Breakouts in liquidity have created resistance zones in the past, signaling bullish or bearish trends for Bitcoin. Chart patterns suggest that the GLI is forming a wedge pattern, and a breakout above the trendline could initiate a parabolic rally for Bitcoin.
Targets to watch for Bitcoin’s price levels include $68,000 as a psychological barrier, a new all-time high of $150,000, and a potential long-term scenario of reaching $350,000. The cryptocurrency remains influenced by macroeconomic factors, particularly related to interest rate cuts and the Consumer Price Index.
As of the latest update, Bitcoin was trading at $56,662, showing a slight correction in the past 24 hours. The weekly chart indicates a nearly 1% increase. To achieve a parabolic rally post-rate cuts, Bitcoin must overcome current resistance levels and reclaim the $60,000 mark to pave the way for further gains.
It’s essential to note that the information provided should not be taken as investment advice, as investing inherently carries risks to capital.