The Federal Reserve is ready to raise interest rates: How will Bitcoin BTC prices react?

Bitcoin is trading around US$77,205 as markets wait for the Federal Reserve interest rate decision

Bitcoin has rebounded after hitting recent lows and is currently trading at around US$77,205. Although it rebounded more than $3,000 from the bottom, it failed to break through the $80,000 mark. It fell slightly by 0.03% today.

The U.S. Consumer Price Index (CPI) report released on September 11 showed that the annual inflation rate was 3.4%, in line with economists 'expectations. However, the next big test for Bitcoin prices will not come from chart form, but from policy decisions in Washington.

Investors prepare for the Federal Reserve's first rate hike in three years

Markets are widely expected that the Federal Reserve will raise interest rates at its September 16 meeting, which will be the first rate hike in three years. According to FedWatch data from CME, the probability of a 25 basis point interest rate hike has reached 87.3%. A month ago, the probability was only 40.6%. In just one month, market expectations have changed dramatically.

Only 12.7% of traders still believe the Fed will keep interest rates unchanged. Richard Clarida, a former Fed vice chairman, believes that one rate hike is not the end point, and there will be more rate hikes to follow. The market is currently pricing in at least three rate hikes by June next year, compared with two previously expected.

A single 25-basis point rate increase in itself has limited effect on curbing inflation. This is likely why traders view it as the beginning of a longer cycle of tightening rather than a one-time event.

Bitcoin ETF continues net outflows

Funds are quietly leaving the Bitcoin ETF. SoSoValue data showed that the U.S. spot Bitcoin ETF recorded a net outflow of US$13.29 million on September 11, which was the fourth consecutive day of negative value. However, not all funds are losing blood. Morgan Stanley's MSBT bucked the trend, with a single-day net inflow of US$3.76 million, becoming the largest single-day inflow among the spot bitcoin ETF that day.

Indicator value 24-hour change BTC price $77,205.7-0.03% Futures volume $74.09B+24.64% Open interest volume $51.55B-3.25% Options volume $4.66B+15.71% Options open interest volume $40.40B-4.08% Long and short ratio 0.9685 Slightly bearish Total liquidation amount (24 hours)$184.20M Long: $89.45M /Short: $94.75M While open interest volume fell, futures trading volume soared. This usually means that traders are actively closing or reducing leveraged positions rather than creating new positions. The options market has a similar story: trading volume has increased, but open interest volume has declined.

According to CoinGlass data, a long-short ratio of 0.9685 suggests that the overall market tends to be slightly bearish. Still, account data from Binance and OKX shows that traders on these exchanges are more inclined to go long.

The chart shows that the market is in a wait-and-see state

On the 4-hour chart, Bitcoin is forming a wide arc consolidation pattern. Support is around $76,000 and resistance is above $82,000.

Buyers are constantly entering the $76,000 to $76,500 range, which is a positive sign. However, Bitcoin traded below its 20-cycle exponential moving average (EMA, US$77,681), 50-cycle EMA (US$78,219), and 100-cycle EMA (US$77,552), indicating short-term weakness. The lower 200-cycle EMA ($74,848) makes the pattern relatively stable for a larger time frame.

The Relative Strength Index (RSI) was 41.45, indicating weak momentum. Since it has not yet entered the oversold area, this indicator alone cannot send a strong rebound signal.

The key point to determine Bitcoin's next trend

If Bitcoin can hold on to the US$76,000 to US$76,500 range and successfully break through US$78,000 to US$78,500, the next target will be US$80,000, followed by US$81,500 to 82,$000. A clean break through $82,000 could open a path to $84,000 to $85,000.

Conversely, if the 4-hour closing price is confirmed to fall below US$76,000, Bitcoin may fall to around US$74,800 to US$75,000, close to the 200-cycle EMA position.

Currently, the short-term situation is neutral to slightly bearish. As long as the US$76,000 support is effective, the overall pattern remains cautiously optimistic. Pay close attention to US$78,500 as a key point for possible reversal momentum and US$82,000 as a significant resistance wall above.

With a Fed decision only days away, volatility could increase rapidly in any direction.

Disclaimer

This article is for reference only and does not constitute financial, investment or trading advice. The cryptocurrency market is highly volatile and carries significant risks. Be sure to conduct independent research and consult a licensed financial adviser before making any investment decisions.