Bitcoin prices face the risk of closing negative on the weekly ahead of the Federal Reserve's decis

Core Views

Bitcoin prices remain near US$77,255, and the market is closely watching Wednesday's Fed interest rate decision. Core CPI data for August pushed the expected probability of a September rate hike from 70% to nearly 90%. The weekly exponential moving average (EMA) resistance level and the declining wedge structure together frame Bitcoin's technical operating range.

Bitcoin prices fluctuate ahead of Fed decision

Bitcoin prices hover around $77,255.91 as traders assess Wednesday's Fed decision to raise interest rates and beware of the risk of a weekly closing down. CoinGecko data showed that BTC prices fell slightly by 0.1%, with the intraday trading range between US$76,515.84 and US$77,377.37. The current market value of Bitcoin is US$1.552 trillion, and the transaction volume reaches US$16.024 billion. The decline was 3% in the past week and 2.1% in the 14-day cycle. However, the monthly increase was still 23.2%, but the one-year return fell 33.4%. This recent crackdown on Bitcoin prices is closely related to rising expectations of rising borrowing costs in the United States.

Two technical forms of Bitcoin price testing

Given the above performance, Rekt Capital believes that there is a risk that BTC will close below the 50-week index moving average on the weekly basis. He pointed out that this signal needs to be confirmed by subsequent rebounds being blocked, thereby turning the moving average into resistance. Previously, Bitcoin had tested the 21-week EMA, which initially played a supporting role, but then the price fell, falling from a mid-low of 70,000 to a low of 60,000. Rekt Capital said that in an established bull market, these two moving averages can usually provide support for Bitcoin. He believes that signs of continued failure on these two indicators indicate that a full bull cycle has not yet begun.

At the same time, The Cryptomist tracks Bitcoin price movements on a shorter 4-hour chart after BTC has broken through a downward wedge. Currently, BTC prices are retesting the wedge boundary, which is the range of $76,500 to $77,000, while $77,800 is seen as the first rebound target. Subsequent downtrend lines form resistance between $79,400 and $80,000. The Cryptomist expects prices to rise briefly before hitting that resistance level, followed by a new round of selling. Its forecast Bitcoin price path points to US$75,000, and then gains support in the US$73,500 -74,000 range. The analyst linked volatility to developments in the CLARITY Act and described a consolidation pattern around $73,500. The chart shows prices are expected to recover to $81,000, but this level is lower than the previous peak of $82,000 shown in the chart.

Inflation data drives up Fed interest rate hike expectations

The Federal Open Market Committee (FOMC) will meet September 15 - 16, and officials are scheduled to announce their interest rate decision on Wednesday. Core CPI rose 0.3% month-on-month in August, higher than expectations of 0.2%. This reading raised the probability of a September rate hike from 70% to nearly 90%. CME FedWatch data shows the probability is close to 87%, indicating that traders are leaning towards a 25 basis point rate hike. The market prices the probability of raising interest rates at least once before the end of the year at 97%. It should be noted that this does not mean that there is a 97% probability of a second interest rate hike, but futures traders expect at least two interest rate hikes in 2026 by the end of the year.

With 10 of the 12 FOMC voting members backing next week's 25-basis point rate hike-a move described as emergency action approved by Federal Reserve Chairman Kevin Warsh-Bitcoin prices may come under new pressure. However, the Federal Reserve's official calendar shows a regular meeting on September 15-16, and there were no other official decisions scheduled on the public calendar before Wednesday's policy announcement.

JPMorgan Chase and Goldman Sachs adjust outlook, Bitcoin faces pressure to raise interest rates

It is worth noting that JPMorgan now expects to raise interest rates by 25 basis points in September and December respectively, changing its previous policy outlook. Goldman Sachs also withdrew its forecast not to change its September policy and instead expected a 25 basis point rate hike. However, Goldman Sachs does not include additional interest rate hikes after September as its main forecast scenario.

Political pressure is moving in the opposite direction, and White House officials continue to support lower borrowing costs. Kevin Hassett, director of the National Economic Council, urged Warsh to consider the timing of the November midterm elections. Hassett pointed out that since 1913, there have been only a rare number of pre-election rate hikes. He also emphasized that avoiding interference in elections is part of the central bank's independence. Still, Hassett said the White House will support any decision the Fed makes. At the same time, President Donald Trump called on the United States to have the lowest interest rates in the world. Trump said he was not sure whether policymakers would raise interest rates on Wednesday. He believes that regardless of the Fed's formula, the U.S. credit strength supports lower borrowing costs. Trump chose Warsh while advocating low interest rates, but Warsh continues to emphasize the importance of controlling inflation.