Bitcoin: Pre-FOMC

Bitcoin is expected to see a 25 basis point rate cut from the FOMC, with historical patterns suggesting a potential muted rally followed by a correction, though a significant breakout is anticipated in October.

• A 25 basis point rate cut is the most probable outcome for the upcoming FOMC meeting.

• Bitcoin's price movements are expected to largely follow historical patterns, with a significant breakout likely in October.

• Watch for an initial 'wrong' market reaction to FOMC news, as it often liquidates traders before the true direction emerges.

The upcoming FOMC meeting is widely expected to result in a 25 basis point rate cut, and while quantitative tightening ending is a possibility, it's not seen as the most likely outcome given current market highs. Bitcoin's price movements often mirror previous years, exhibiting rallies, corrections, and strong breakouts, particularly in October, although the initial market reaction to FOMC news frequently proves to be misleading.

Expected FOMC Outcome

• 00:00:16 The next FOMC meeting is anticipated to deliver a 25 basis point rate cut, as indicated by the CME Group watch tool. Any deviation from this, such as maintaining rates or a 50 basis point cut, would significantly surprise the market. The Federal Reserve typically adheres to the most expected outcome when an announcement is imminent.

Quantitative Tightening Outlook

• 00:01:02 While some speculate that quantitative tightening (QT) could end, this outcome is not highly probable. Despite earlier suggestions of QT ending by mid-year, it has persisted nine months into the year. With the stock market, gold, Bitcoin, and Ethereum all near or at all-time highs, there seems to be no urgent need to halt or slow the pace of QT.

Bitcoin's Historical Pattern

• 00:02:11 Bitcoin's behavior often correlates with past FOMC rate cuts and market cycles. Similar to last year, Bitcoin bottomed in early September, experienced a rally, then a correction before the FOMC, followed by another rally. However, unlike last year's 50 basis point cut and subsequent rally, this year's expected 25 basis point cut might lead to a more muted rally and potential correction, with the 20-week SMA holding as support this time.

Bitcoin Price Trajectories

• 00:03:53 Two primary scenarios for Bitcoin's price trajectory are tracking the 2017 movement or the 2020 movement. The 2017 path suggests a slow creep up into late September with a slight pullback, breaking out in October. The 2020 path indicates an impulsive move, followed by sideways action, a retest of the 20-week SMA, and then a strong run in October.

S&P 500 Impact on Bitcoin

• 00:05:09 Bitcoin's potential struggle to reach new all-time highs could be attributed to a seasonal correction in the S&P 500. Historically, the S&P experiences a 5% drop in late September or early October, which has coincided with Bitcoin's consolidation. Many past cycles show Bitcoin breaking through to new all-time highs in October, even after such S&P pullbacks.