The possibility of The Federal Reserve (FED) lowering interest rates is over 98%! Bitcoin price rebounds, with $130,000 as the target price.

Bitcoin price broke through $112,000, with BTC showing range fluctuation over the weekend. The Fed Watch data from the Chicago Mercantile Exchange Group (CME Group) indicates that the possibility of a 0.25% rate cut by The Federal Reserve (FED) exceeds 98%, with a rate cut almost certain at the FOMC meeting on October 29. Analysts suggest that a regional breakout could push BTC up to $130,000.

The Federal Reserve (FED) has a probability of over 98% for interest rate cuts, confirming a wave of global monetary easing

(Source: CME Fed Watch)

Looking ahead, this week will bring another significant event for cryptocurrency and risk asset investors. The Federal Reserve (FED) has just released inflation data that came in below expectations, and it is anticipated that they will lower interest rates by 0.25% at the meeting on October 29. As of the writing of this article, data from the FedWatch tool of the Chicago Mercantile Exchange Group (CME Group) shows that the probability of this outcome is over 98%.

A 98% probability in the financial markets is almost equivalent to “certainty.” The Federal Reserve lowering interest rates means that dollar liquidity will increase, and the cost of funds will decrease, which is a significant positive for all risk assets, including Bitcoin. Lowering interest rates usually leads to a depreciation of the dollar, and Bitcoin, as “digital gold,” will benefit from the safe-haven demand arising from the decline in the dollar's purchasing power. Furthermore, lower interest rates reduce the opportunity cost of holding cash, making investors more willing to allocate funds to income-generating assets like Bitcoin.

The letter from trading resource Kobeissi places the Federal Reserve's interest rate cuts in the context of a “turning point” for central bank rates worldwide. “So far, 82% of central banks globally have cut rates in the past 6 months, the highest percentage since 2020. The pace of rate cuts by central banks in this century has only been seen during periods of economic recession,” the report wrote on X. “Global monetary easing is fully underway.”

This global wave of monetary easing provides macro support for Bitcoin prices. When 82% of central banks are simultaneously cutting interest rates, it signifies that global liquidity is expanding on a large scale. This liquidity not only stays in traditional financial markets but also spills over into the cryptocurrency market. Historical experience shows that the coordinated interest rate cuts and quantitative easing by global central banks in 2020 directly drove the cryptocurrency bull market in 2021. If the current global monetary easing continues, Bitcoin may experience a similar explosive growth.

Global Central Bank Rate Cut Wave Data:

Interest Rate Cut Central Bank Ratio: 82% (in the past 6 months)

Historical Comparison: Similar speeds have only appeared during periods of economic recession.

The Federal Reserve (FED) interest rate cut probability: 98% (October 29 FOMC meeting)

Expected Rate Cut: 0.25% (25 basis points)

Historically, shifts in the Federal Reserve's monetary policy often mark the beginning of a bull market in Bitcoin prices. After the Federal Reserve transitioned from raising interest rates to cutting rates in 2019, Bitcoin rebounded from $3,000 to $10,000 in 2020. The emergency rate cuts and unlimited QE by the Federal Reserve in 2020 propelled Bitcoin from $4,000 in March 2020 to its historic high of $69,000 in November 2021. Currently, if the Federal Reserve enters a rate-cutting cycle again, Bitcoin may replicate this explosive growth.

Bitcoin price challenges key resistance at 112,000 USD

(Source: Trading View)

Bitcoin price challenged $112,000 on Sunday, with data from Cointelegraph Markets Pro and TradingView indicating that BTC price movements were characterized by range fluctuations over the weekend. Driven by favorable U.S. inflation data, the Friday close rebound helped bulls rise to higher levels within this week's range. Now, market participants see the possibility of new highs, as weekly closes typically experience greater fluctuations.

Trader Crypto Caesar observed that the resistance level of 112,000 USD was retested that day. In a post on X, he wrote: “A thorough breakout and close above that price level can confirm that the bullish momentum will continue to 123,000 USD.” The movement from the current Bitcoin price of about 112,000 USD to 123,000 USD implies an approximate 10% upside potential. This is a relatively moderate but achievable short-term target, suitable for conservative traders.

Why is $112,000 a key resistance? From a technical structure perspective, this price level is the recent relative high for Bitcoin and also a resistance zone that has failed to break through effectively after multiple tests. Whenever the Bitcoin price approaches $112,000, it faces significant selling pressure from profit-taking. This selling pressure may come from short-term traders closing their positions or from early buyers partially reducing their holdings. Only when the buying power is strong enough to absorb all the selling pressure can an effective breakthrough be achieved.

“A complete breakthrough and closing above that price level” is a key statement. In technical analysis, “closing” means that the daily or hourly closing price remains stable above the resistance level, rather than just briefly touching it. If the Bitcoin price can stabilize above $112,000 with a daily closing price, it will confirm the validity of the breakthrough, attracting more buying pressure and pushing the price towards $123,000.

Cryptocurrency investor and entrepreneur Ted Pillows shares a similar sentiment. “$BTC seems to be in a short-term upward trend. Four consecutive green daily candles indicate that someone is continuously TWAPing Bitcoin,” he told his X fans that day. TWAPing (Time-Weighted Average Price) is a large purchase strategy commonly used by institutional investors to avoid the market price impact of a single large order by buying in batches over a period of time. The combination of four consecutive green daily candles and TWAPing signals indicates that institutional-level funds are continuously flowing into Bitcoin.

“I am still focused on the $112,000 to $114,000 area, as a rebound could quickly push BTC above $118,000.” Ted Pillows' analysis provides a more detailed price path: first breaking through the resistance zone of $112,000 to $114,000, and then accelerating up to $118,000. This phased target setting offers traders clear operational guidance.

The short-term holder cost basis of 113,000 USD becomes key

(Source: checkonchain)

Others are waiting nearby, watching the X analysis account named after the famous economist Frank Fetter for a breakthrough at $113,000. The company added last week that this represents the current total cost basis of Bitcoin short-term holders (entities holding for a maximum of six months). This metric is significant in Bitcoin price analysis as short-term holders are usually the most active trading group in the market, and their cost basis often becomes an important support or resistance level.

The report states: “If BTC can reclaim the short-term holder cost basis of $113,000, then entering the blue range of $130,000 to $144,000 feels right.” The range from $113,000 to $130,000 to $144,000 implies an upside potential of 15% to 27%. This target setting is based on on-chain data analysis, which has more fundamental support than purely technical analysis.

Why is the breakthrough of the cost basis for short-term holders so important? When the price of Bitcoin is above the average cost of short-term holders, it means that these active traders are overall in a profitable state. Holders in a profitable state are usually more willing to continue holding or add positions rather than panic-sell. Conversely, when the price is below the cost basis, short-term holders face losses and are more likely to panic and cut their losses. Therefore, reclaiming $113,000 is not only a breakthrough in price level but also a shift in market psychology.

From the current Bitcoin price of about $112,000, it is only about 0.9% away from $113,000, which is a very small distance. If the news of the Federal Reserve cutting interest rates coincides with a technical breakthrough, the Bitcoin price could easily surpass this threshold. Once it stabilizes above $113,000, short-term holders will collectively turn into profit, which will unleash strong bullish momentum, pushing the Bitcoin price towards the blue range of $130,000 to $144,000.

October 29 FOMC Meeting Becomes a Key Time Point

The Federal Reserve (FED) is expected to announce an interest rate cut at the FOMC meeting on October 29, providing the market with a clear timeline. There are still 5 days from the current date, October 24, to October 29. During this time, the market will be in the “expectation trading” phase, where investors will bet in advance on the market impact of the rate cut. If the Bitcoin price continues to rise and breaks through $113,000 within these 5 days, it will confirm the market's positive reaction to the Federal Reserve (FED) rate cut.

On October 29, the day of the FOMC meeting, market fluctuations may intensify. If the Federal Reserve (FED) cuts interest rates by 0.25% as expected, and the meeting statement or the chairman's press conference releases expectations for further rate cuts, the price of Bitcoin may experience a “buy the fact” increase. Conversely, if the Federal Reserve (FED) adopts a hawkish stance, emphasizing anti-inflation and limiting future rate cut space, it may trigger a “sell the fact” pullback.

Historically, the beginning of a Federal Reserve rate cut cycle often marks the starting point of a bull market in risk assets. After the Federal Reserve ended its rate hike cycle and began cutting rates in 2019, both the stock market and Bitcoin experienced significant rebounds. The emergency rate cuts in 2020 directly initiated a historic bull market. If the rate cut on October 29 confirms the start of a new round of easing cycle, the price of Bitcoin may not only break through $112,000, but is also likely to challenge or even surpass its historical high, initiating a new price discovery phase.

For investors, the current strategy choice depends on risk preference. Conservative investors may wait until after the results of the FOMC meeting on October 29 to make decisions, confirming interest rate cuts and assessing market reactions. Aggressive investors may allocate in advance, betting that the Federal Reserve will cut rates as expected and that the market will respond positively, but they need to set stop-loss orders to deal with unexpected events. A moderate risk strategy is to participate with light positions at the current price, and to increase positions if it breaks above $113,000, using technical analysis to confirm and reduce risk.