The price of Bitcoin fluctuated sharply after the announcement of the Federal Reserve's interest rate cut, falling from around $94,500 to about $89,300, with both bulls and bears engaging in intense battles at key price levels.
Yesterday we reminded everyone that the interest rate cut would lead to significant selling pressure, advising against blindly chasing long positions. Unfortunately, we still believed that subsequent meetings would mention dovish remarks to allow prices to continue rising towards our short position near $96,000. Unexpectedly, Powell again played it coy, but we advised everyone to avoid blindly chasing long positions to guard against major selling pressure, which helped restrain those impulsive friends chasing longs!
01 Current Macro Environment
The focus event in the global financial market today has been settled. The Federal Reserve announced a 25 basis point reduction in the benchmark interest rate, setting the new target range at 3.50%–3.75%.
This rate cut was a result that the market widely anticipated. Before the decision was announced, the derivatives market reflected about a 96% probability of a rate cut.
At the same time, the Federal Reserve officially ended its quantitative tightening policy and resumed government bond purchases, marking a significant shift in the global dollar liquidity landscape.
In theory, lowering interest rates and injecting liquidity will reduce the attractiveness of risk-free assets, prompting funds to seek higher returns, which macro benefits risk assets including Bitcoin.
02 Mixed Messages
The current news affecting the Bitcoin market presents a complex tapestry of mixed signals.
On the positive side, aside from the Fed's policy shift, Bitcoin's structural advantages remain solid. In a macro environment of liquidity expansion, it is more attractive. Vanguard, one of the largest asset management companies in the U.S., has opened its brokerage platform to support third-party crypto ETFs for the first time, bringing new institutional funding channels.
Negative factors cannot be ignored either. Firstly, alongside this rate cut, the Fed released a somewhat hawkish forward guidance, indicating that the pace of future monetary easing may slow down, which dampens market optimism. Secondly, there has been a recent net outflow of funds from Bitcoin spot ETFs; attention should also be paid to Japan, which may soon begin raising interest rates, and whether the subsequent intensity of domestic regulation will increase, all of which will affect price direction!
The day before the Fed's decision was announced, the ETF net outflow reached $60 million, while last week approximately 1,160 Bitcoins (worth about $1.05 billion) flowed out, indicating that some institutional investors chose to take profits before good news materialized.
03 Technical Analysis and Key Price Levels
From the market perspective, Bitcoin is currently in a highly compressed oscillation range, with long and short forces forming a temporary balance.
Key Resistance and Support
The current core resistance zone is concentrated between $91,500 and $94,500. This is also the main pressure area where Bitcoin quickly retreated after reaching $94,500 following the rate cut announcement. Below, $90,000 is widely viewed as the core support level, while the area of $88,000 to $89,000 is a more critical defense line for maintaining the current upward structure.
From a market structure perspective, Bitcoin still maintains above an upward trend line in the short term. If it can hold the support around $89,000, it is expected to challenge $96,000 again.
Based on the above analysis, the following are specific trading plans based on different scenarios; please use them cautiously, considering your own risk tolerance.
Main Scenario One: Range oscillation, high sell low buy.
· Applicable Conditions: Price oscillates within the range of $88,000 - $94,000, with no significant breakout in volume.
· Long Entry Point: $88,500 - $89,500 range.
· Long Stop Loss Point: Below $87,400.
· Long Target Price: $92,500 - $94,000 resistance zone.
· Short Entry Point: $96,000 - $98,000 range.
· Short Target Price: $90,000 (core support) or $89,000 (gap fill).
Main Scenario Two: Break upward, trend following long.
· Applicable Conditions: Price breaks out with volume (focus on transaction volume) and stabilizes above $94,500.
· Entry Point: Confirm support when it retraces after breaking through $94,000 - $94,500.
· Stop Loss Point: Below $93,000.
· Target Price: First target $96,000, second target looking towards psychological level of $98,000.
Main Scenario Three: Break down, trend turns bearish
· Applicable Conditions: Price effectively breaks below the key support area of $88,000.
· Entry Point: When rebounding to $88,500 - $89,000 meets resistance, or after a significant drop.
· Stop Loss Point: Above $90,000.
· Target Price: First target $87,400, deeper targets may point to around $83,200 and $78,500.
During the window period of major events like the Fed's interest rate decision, the market is highly volatile. Data shows that in one market fluctuation in October, over $19 billion of leveraged positions in the crypto market were liquidated. Therefore, it is essential to strictly control positions, avoid using high leverage, and prioritize stop-loss discipline.
Around $92,500, neither buyers nor sellers have formed an overwhelming advantage. The market is digesting the full implications of the "hawkish rate cut" and waiting for the next catalyst.
"Bitcoin is currently consolidating in the $90,000-$94,000 range, preparing for subsequent long-term drivers to propel it toward a new equilibrium." This tug-of-war around key price levels will determine the final direction of the year-end market.
The above is solely Jiang Feng's personal opinion and does not constitute any investment advice.
Written by: Jiang Feng Capital (formerly known as E-B Trader)
