Bitcoin Faces Resistance Amid Expected Fed Rate Cut

Bitcoin's Performance Under Scrutiny Ahead of Potential Rate Cut

Bitcoin is showing signs of struggle as the market anticipates a potential Federal Reserve rate cut at the September 17 FOMC meeting. Despite a 4% weekly gain, BTC faces strong resistance at $116,000, sparking debate among analysts.

Expert Opinions Diverge on Bitcoin's Trajectory

While the market widely expects Fed Chair Jerome Powell to announce at least a 25 bps interest rate cut, opinions on Bitcoin's response are mixed. Some analysts believe rate cuts during rising inflation could worsen economic risks.

One analyst noted Bitcoin's underperformance compared to traditional safe-haven assets like Gold and Silver, which are showing strength amid economic uncertainty. Bitcoin remains 15% below its 2021 peak.

Contrarian View: Rate Cuts and Risk Assets

Crypto market expert Ted Pillows suggests that U.S. interest rate cuts often signal underlying economic turmoil, which can be bearish for risk assets in the short term. Historical data indicates that major U.S. stock indices have shown muted or negative performance in the three months following an initial Fed rate cut.

Altcoins Show Strength

Despite Bitcoin's struggles, altcoins have demonstrated relative strength, with the altcoin season index trending upward. Some believe digital assets tend to bottom before U.S. equities, suggesting a potential divergence in performance.

Looking Ahead

Goldman Sachs anticipates three consecutive 25 basis point cuts from the Federal Reserve in September, October, and December, followed by two additional cuts in 2026, potentially lowering the federal funds rate to a target range of 3%–3.25%. The impact on Bitcoin and the broader crypto market remains to be seen.