What’s Happening
Price Action
BTC price action had been sleepy and ranging this week, until the past few hours when price sharply dropped lower. The result is that price is now down -3.1% versus this time last week.
Figure 1: BTC now down versus last week after the recent sharp move today.
Interestingly, today’s sharp price drop landed exactly on the 128-day moving average (blue line). This moving average level is one of the key bull market technical indicators we track, as it frequently acts as support for BTC during its bullish cycles.
Figure 2: BTC remains above its key moving averages.
It will be interesting to see if this level now holds as support over the coming days.
Despite today’s pullback, BTC continues to hold above the Short Term Holder Realized price, another broad area of support to monitor in Bitcoin bull markets. The Short Term Holder Realized Price (orange line in the chart below) is currently $111,538.
Figure 3: Short-Term Holder Realized Price.
At Bitcoin Magazine Pro, we believe that despite today’s downward price action, the broader data reflects a clear continuation of the bull market, and we expect this to remain the case unless there is a significant breakdown in any of our key Bitcoin metrics.
We cover this in more detail in our Big Story below…
The Big Story: Fed Policy Uncertainty Meets Bitcoin’s Bullish Backdrop
Should we be worried about recent comments by Fed President Neel Kashkari? He and other officials have highlighted uncertainty over how many rate cuts will be needed to reach a “neutral” policy stance. With the neutral rate now estimated around 3.1%, which is above pre-pandemic levels, the path of monetary easing looks less predictable.
This has created some short-term hesitation for Bitcoin price, as traders weigh the pace and scale of cuts. But with the first cut already behind us as of last week (see Fed Funds Target vs BTC chart below) and expectations of more to come, the macro picture remains supportive.
Figure 4: Recent rate cut by the Fed.
Historically, easing cycles have fueled risk assets, and BTC has been a key beneficiary of this trend.
This is reinforced by falling Treasury yields (see Treasury Yields vs BTC chart below). Lower yields reduce the appeal of cash and bonds, pushing capital toward higher-beta assets like Bitcoin.
Figure 5: Treasury Yields in decline, bullish for BTC.
With the recent Fed rate cut, we are now seeing an acceleration of this trend of yields coming down, which drives more money into risk-assets like Bitcoin. Which in turn, pushes the price of Bitcoin up.
At the same time, global liquidity continues to climb, with M2 money supply making new all-time highs.
Figure 6: Global Liquidity new all-time-highs.
Abundant global liquidity has consistently underpinned BTC bull markets. With global liquidity making fresh highs, we can expect money to move into Bitcoin over time, especially given its hard asset properties.
While near-term uncertainty remains about the exact timing and number of Fed cuts, the backdrop of falling yields, rising liquidity, and a pivot toward easing continues to tilt the outlook bullish for Bitcoin.
Even on days like today when BTC is down, it’s important to zoom out because the broader macro environment remains strongly bullish for Bitcoin.
The Bitcoin Magazine Pro Team.