Bitcoin price could be on the cusp of a major bearish breakdown, potentially to $100,000 or below, despite the Federal Reserve interest rate cut. The BTC coin was trading at $116,000 on Thursday, up significantly from the lowest level this month.
Federal Reserve Interest Rate Cuts are Bullish for BTC
Bitcoin has some notable catalysts, with the start of the interest rate-cutting cycle being the main one. In a statement on Wednesday, Jerome Powell and his committee decided to slash rates by 0.25% to between 4.0% and 4.25%.
Most notably, the dot plot hinted that most officials expect the bank to deliver two more cuts this year. They believe that another 50-basis-point cut will help boost the struggling labor market. However, some analysts, including those at ING, predicted that it would deliver more cuts in 2026. They wrote:
“We look for 25bp cuts in October and December with additional cuts in January and March, at which point we think the Fed will take stock of the situation.”
Low interest rates boost Bitcoin prices by reducing bond yields, devaluing the dollar, and boosting appetite for risky assets. Indeed, short-term US bond yields plunged after the Fed cut interest rates.
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The expectation of the rate cuts explains why American inventors have been buying Bitcoin recently. Spot Bitcoin ETFs have added over $2 billion in assets, with the IBIT ETF slowly nearing the $100 billion asset mark.
Bitcoin Price Technical Analysis Points to a Crash
While Bitcoin price has strong fundamentals, there is a risk that the coin will crash initially and then rebound. The main reason is that the interest rate cut may become a sell-the-news event. This is a situation where investors buy an asset and then dump it when the anticipated event happens.
The other reason is that Bitcoin has formed wedge patterns on the weekly and daily charts. The daily timeframe chart shows that the coin has slowly formed this wedge, and the two lines are nearing their confluence.
A bearish breakdown normally happens when these two lines are about to converge. At the same time, the Relative Strength Index (RSI) has formed a bearish divergence pattern as it has continued falling lately.
Therefore, the combination of selling the news, rising wedge, and the falling divergence points to a drop towards the support at $107,000 or even $100,000.
On the positive side, this decline will make Bitcoin cheaper ahead of the fourth quarter, which is normally the most bullish for Bitcoin prices.
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