Bitcoin Holds at $97,000 as 83% Fed Rate Cut Odds Fuel $101K Target
The cryptocurrency market is closely watching the Federal Reserve, with an 83% likelihood of a 0.25% rate cut next week.
If approved, this would bring the benchmark borrowing rate to a range of 4.25%-4.50%. Lower interest rates often diminish the appeal of traditional investments, prompting more investors to consider alternative assets like Bitcoin.
Despite these expectations, the US Dollar Index (DXY) remains robust at around 106.20, reflecting sustained strength. This could moderate Bitcoin’s upward momentum in the short term.
However, November’s strong US job data—227,000 jobs added, exceeding forecasts of 200,000—has fueled speculation for a Fed pivot. Additionally, average hourly earnings rose 0.4%, suggesting that inflation pressures persist, creating potential opportunities for Bitcoin, a popular hedge against inflation.
Inflation and the Bitcoin Hedge Narrative
Federal Reserve Governor Michelle Bowman has urged caution in cutting rates prematurely, citing ongoing inflation concerns. Investors are now awaiting the US Consumer Price Index (CPI) report, which will provide further clarity on inflation trends.
If inflation accelerates, Bitcoin could see renewed buying interest. Its capped supply and decentralized nature make it a favored store of value during inflationary periods. With speculation building around a rate cut and persistent inflation, institutional adoption of Bitcoin is likely to grow further, potentially driving prices higher.
Bitcoin Technical Analysis
On the 4-hour chart, Bitcoin has found solid support at $97,140, a level closely tied to an ascending trendline. The 50-day EMA at $98,310 acts as immediate resistance, with a potential breakout targeting $101,290.
Momentum indicators show mixed signals, with the RSI at 42 indicating lingering bearish momentum. A sustained break above $98,310 could attract renewed buying interest, signaling a bullish recovery. On the downside, a failure to hold $97,140 risks exposing Bitcoin to further declines, with the next support levels at $94,340 and $92,120.
Key Technical Levels:
- Support: $97,140, $94,340, $92,120
- Resistance: $98,310, $101,290
- RSI: Currently at 42, approaching oversold conditions
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