The United States Federal Reserve (FED) has therefore pivoted and put an end to its monetary tightening cycle initiated in January 2022 in order to counter inflation. The FED has updated its macroeconomic projections, let's examine the consequences for the bitcoin price.
The FED remains confident in the disinflation/soft landing combo
It's done! The FED therefore pivoted during its monetary policy decision on Wednesday, September 18, by lowering its key interest rate by 50 basis points (50 bps, or 0.50%) and giving the starting point to a downward cycle of its interest rates for the coming months (easing cycle).
This reversal of monetary policy by the world's leading central bank marks a victory in the fight against inflation, as well as the desire to protect the US economy from economic recession.
The Fed has updated its macroeconomic projections and there is some optimism with Fed officials believing in the ideal fundamental scenario: the economic framework of the soft landing accompanied by disinflation.
This macroeconomic framework is theoretically favorable to the upward trend of risky assets on the stock market (stocks and cryptos), we see an increase in the price of Bitcoin of a few percent since yesterday's announcement. It is now necessary for the update of the next major economic data (growth, household consumption, employment and inflation) to confirm that the FED's prospective scenario is the right one.
Anglo-Saxon high finance is very attached to the concept of “reality check”, that is to say that the trend of cryptos in the coming weeks will be very “data dependent” on macroeconomic data from the United States.
The next major update will come on Friday, September 27 with the release of the PCE, the Fed's most closely followed inflation and measure of household consumption spending.
Keep in mind that to get the starting point of a healthy bull run, the following combination is needed: Stabilization of inflation around 2% on an annual basis and preservation of a solid labor market.
Chart showing the federal funds rate (FED funds) in the United States
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The bull run will start in October/November
Patience, patience, patience! The last halving of the bitcoin price took place on April 20th, we are now 150 days after the halving of the mining reward.
If the current bull cycle (that of 2024/2025) follows the time pattern of previous cycles, it is likely that the bull run will start from the coming months of October/November.
Until then, September can still be tricky for crypto investors, so be careful, be patient and avoid leveraged trading.
The bullish technical release should occur around mid-October.
Chart comparing the 2016, 2020 and 2024 bull cycles and the time needed post-halving before the bull run starts
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Vincent Ganne is a recognized expert in technical analysis with 18 years of experience. He frequently appears on BFM Business and produces exclusive analyses for Cryptoast Research. With his extensive experience, Vincent offers a global approach to financial markets, taking into account macroeconomic events and using many aspects of graphical analysis to forecast the trends of Bitcoin and other cryptocurrencies in the medium and long term. He also held the position of Senior Market Analyst & Business Development Manager for 3 years at TradingView, thus reinforcing his in-depth knowledge of financial markets.
Vincent Ganne
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