Bitcoin is currently facing a critical resistance level around $116,000, according to analysts from Bitfinex. They indicate that this threshold is unlikely to shift until the cryptocurrency can gain renewed momentum. Bitcoin recently traded at $116,370, marking a 4.34% increase over the past week, as detailed by CoinMarketCap.
Bitfinex noted that Bitcoin’s momentum has waned since it hit an all-time high of $124,100 on August 14. This decline has led to a situation where Bitcoin’s price has fallen below the cost basis for many recent buyers, particularly those who entered the market within the $108,000 to $116,000 range.
Market participants are closely watching the upcoming interest rate announcement from the US Federal Reserve, scheduled for Wednesday. The CME FedWatch Tool shows a 96.1% probability for a 25 basis point cut, which could influence Bitcoin’s performance. Analysts exhibit divergent views on the potential impact of a rate cut on Bitcoin prices. Fundstrat co-founder Tom Lee considers it a possible catalyst for Bitcoin and Ether to experience significant gains in the following months. Conversely, crypto analyst Ted cautions that a rate cut could first cause Bitcoin to dip to $104,000, or even lower to $92,000, before rebounding.
Typically, cuts in interest rates are seen as bullish for risk-on assets, as investors begin to favor these assets over traditional investments like bonds. However, analysts caution that prices may not react positively if the market has already factored the potential cut into valuations.
The overall sentiment in the crypto market remains mixed, with the Crypto Fear & Greed Index indicating a “Neutral” score of 53.
As the market looks ahead, many participants are focusing on October 1, the beginning of the fourth quarter, which has historically been a strong period for Bitcoin, boasting an average return of 85.42% since 2013, according to CoinGlass.
Despite the recent sell-off that saw Bitcoin drop to $107,400 on September 1, Bitfinex analysts remark that long-term holder confidence remains robust. They suggest that the recent downturn was largely driven by newer investors who took advantage of a bounce to exit profitably, presenting challenges for any immediate upward momentum in Bitcoin’s price.
