Bitcoin price has bounced back over the past few days, rising from a low of $80,630 in November to the current $90,250, as investors awaited the upcoming Federal Reserve interest rate decision. Still, technicals suggest that the ongoing BTC price rebound will be brief.
Bitcoin Price Has Formed Bearish Patterns
The daily timeframe chart shows that the BTC price has remained under pressure over the past few months, moving from the year-to-date high of $126,250 to a low of $80,630.
A closer look shows that the coin remains at risk of a big reversal in the coming days. For one, the coin has remained below the Supertrend indicator, which is one of the riskiest technical analysis signals.
Additionally, the coin has formed a rising wedge pattern, comprised of two converging trendlines, with a bearish breakout occurring when the two lines near their confluence level.
The forming rising wedge pattern is part of the formation of the bearish pennant pattern, which is made up of a vertical line and a symmetrical triangle pattern.
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Bitcoin’s price also remains below the 50-day and 200-day Exponential Moving Averages (EMAs), which formed a death cross on November 4 this year. A complete Bitcoin recovery will happen if the coin moves above the 50-day and 200-day moving averages.
Therefore, the most likely Bitcoin price prediction is bearish, with the next key support level to watch being at $80,637, its lowest point in November.
Federal Reserve to Deliver a Hawkish Cut
There are a few reasons why the Bitcoin price may drop after the upcoming Federal Reserve interest rate decision.
First, the coin may drop if the Federal Reserve cuts interest rates as investors sell the news, as the cut has already been priced in by market participants, with the odds of cuts rising to 95% on Polymarket and Kalshi. As such, the rate cut will not catch investors by surprise.
Second, the rate cut will be a hawkish one, with analysts expecting a few dissents, which is a rare situation. In a note to BanklessTimes, Michael McGowan, the head of strategy at Pathstone, said:
“We expect a 25-basis-point cut, but likely a hawkish one. You may even see a couple of dissents, which is rare — it’s only happened about five times in the last 25 years. I expect Chair Powell to reiterate that a cut from here is not a foregone conclusion. The Fed will remain data dependent, especially with key jobs and inflation reports coming after this meeting. Our base case is a cut this week, followed by a pause until there’s more clarity from the data.”
Third, additional rate cuts may ultimately be bearish for Bitcoin, as they will increase the odds of stickier inflation. This likely explains why the US bond market has struggled over the past few days, with yields on the five-year and ten-year bonds in a slow uptrend. In most cases, a 10-year yield of 4.5% is bearish for risky assets.
Finally, the Bitcoin price has already remained in a technical bear market after the Fed started cutting interest rates a few months ago. This means that the impact of the cut on Bitcoin has been relatively muted.
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