Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin’s price experienced a notable decline today, dropping as low as $110,000, alongside a significant dip in market sentiment on prediction platforms. The downturn followed remarks from Federal Reserve Chair Jerome Powell, who indicated that a December interest rate cut was “not a foregone conclusion,” dampening earlier optimism despite the Fed’s decision to implement a 0.25% rate cut on Wednesday afternoon.
Market Reaction to Fed Statements
The Federal Reserve reduced its target federal funds range to 3.75%-4.00%, a move largely anticipated by the market. However, Powell’s more hawkish-than-expected comments, suggesting future rate cuts were uncertain, triggered a broader crypto market sell-off, with Bitcoin, Ethereum, and other digital assets plunging.
On the prediction market Myriad, sentiment regarding Bitcoin’s future trajectory fell sharply by nearly 20%. The odds favoring a climb to $120,000, which were previously at 75%, decreased to 58%, signaling a notable shift in trader optimism for Bitcoin’s short-term prospects.
The “Sell the News” Phenomenon
Market analysts had suggested that the Fed’s rate cut, being widely priced in, offered little fuel for a rally. The subsequent sell-off is likely attributed to profit-taking by traders who had positioned themselves ahead of the announcement, combined with the impact of Powell’s cautious statements.
Despite the short-term market volatility, institutional investment in Bitcoin continues to show strength. Bitcoin ETFs recorded $202.48 million in net inflows on October 28, pushing the cumulative total net inflow to $62.3 billion. This indicates a robust underlying conviction among long-term investors, even as short-term traders react to immediate news.
Technical Indicators Signal Weakness
Technical analysis reveals a challenging short-term outlook for Bitcoin. The Relative Strength Index (RSI) on the daily chart stands at 44.87, suggesting a neutral zone with a slight bearish tilt. On the four-hour chart, the RSI is lower at 36.38, approaching oversold territory and indicating building selling pressure.
The Average Directional Index (ADX) reinforces this sentiment, with a daily reading of 17.29 and a four-hour reading of 24.22. These figures, both below the 25 threshold, suggest a lack of strong trend conviction and growing market indecision.
Exponential Moving Averages (EMAs) present a mixed picture. The 50-day EMA remains above the 200-day EMA on the daily chart, typically a bullish signal for the longer-term uptrend. Conversely, the four-hour chart shows a bearish “death cross,” with the 50-period EMA falling below the 200-period EMA, indicating a shift in short-term momentum to the downside.
October’s “Uptober” Narrative Challenged
Earlier technical analysis had suggested Bitcoin was poised to close October above the $114,200 monthly open, potentially sustaining the “Uptober” seasonal trend. However, with Bitcoin currently trading around $111,700, approximately 2.2% below the monthly open, a significant reversal would be required in the coming days to prevent a red close for the month.
Looking Ahead
Bitcoin currently sits at a critical juncture, with market focus now shifting to pure price action. The immediate future will likely determine whether the cryptocurrency tests the $100,000 support level or manages to reclaim its path towards $120,000.
The bearish scenario is supported by weak technical indicators, a dramatic shift in prediction market sentiment, and a loss of short-term momentum. The $110,000-$111,000 zone offers temporary support, but a break below this could see Bitcoin heading towards the stronger support at $106,000-$108,000, where the 200-day EMA resides.
For a bullish rebound, Bitcoin would need to reclaim and hold above $112,500. A sustained push through $114,000 with increased trading volume could invalidate the current bearish setup and open the door for a move towards $117,000-$120,000.
