Bitcoin in feverish anticipation of the Fed

The price of Bitcoin has been essentially stagnant for several days, awaiting the Federal Reserve’s (Fed) decisions regarding its monetary policy. 

The picture, however, remains relatively complex.

Bitcoin and the Fed

The changes in the monetary policy of the Fed directly affect the US dollar, and in particular its market value. 

Since the value of Bitcoin tends to increase if that of the dollar decreases, in the event that changes in the Fed’s monetary policy cause the value of the dollar to fall, they could also indirectly cause the value of Bitcoin to rise. 

In particular, the trend to keep an eye on is that of the Dollar Index, which measures the changes in the value of the US dollar against a basket of other global currencies. 

The circulating hypothesis is that starting from mid-September, the Fed might indeed be forced to ease its currently restrictive monetary policy, with slightly negative consequences for the dollar. 

The Rate Cut

All the attention is currently focused on the interest rate cut. 

For example, the European Central Bank (ECB) in the last year has cut interest rates from 4.5% to 2.15%.

Instead, the Fed has only cut them from 5.5% to 4.5%, and it hasn’t cut them since December. 

The markets expect a minimal cut in September, of 25 basis points, but the issue is more complex. 

In fact, this cut has practically already been priced in, as it is considered almost certain, but it should be just the first in a long series. Furthermore, it is not yet certain that it will be only 25 basis points. 

The upcoming important dates

Regarding the possible 50 basis points cut in mid-September, tomorrow we might already have some interesting data on this. 

Indeed, the data related to the US labor market (the so-called non-farm payrolls) are released, which could change the game. 

The markets expect a slight increase in new non-farm jobs created in August in the USA, compared to the 73,000 in July, but if tomorrow’s data paints a worse situation, the Fed might be forced to accelerate the rate cuts, to bring them as soon as possible to 4% or even lower. 

Moreover, on Tuesday, September 9, the revisions of the estimates from past months will be released, and if they are downward, the pressure on the Fed should increase further. 

So between tomorrow and Tuesday, the need for the Fed to cut rates by 50 basis points in September, and not just by 25, might even already become apparent. 

Additionally, on September 17, when the Fed’s decision on rates will be announced, there will be the usual press conference by Chairman Powell. If during that conference he hints at a greater inclination of the central bank towards further rate cuts, the markets could react even more positively. 

For now, the markets are pricing in only two rate cuts of 25 basis points by the end of the year, but if they were to increase to three of 25, or two of 25 and one of 50, their reaction would be positive in the medium-short term. 

The Reaction of Bitcoin

Bitcoin actually seems ready to take off. 

In fact, the selling pressure of BTC on crypto exchanges is at an all-time low for this cycle. Therefore, a significant increase in buying pressure would be enough to drive the price up. 

Note that 2025 is in some ways similar to 2017, regarding the price trend of Bitcoin. 

In 2017, right in mid-September, there was the last correction before the start of the great autumn bullrun, which began in the first half of October and ended in mid-December. The following year, there was a heavy bear-market. 

The scenario described earlier would seem to be compatible with a similar trend, especially since the correction has already occurred and concluded last Tuesday. 

If between Friday and next Tuesday the US labor market data were to push the Fed to accelerate on rate cuts, Bitcoin’s reaction could be quite positive, possibly in anticipation of the bullrun restarting on September 17. 

The Long Term

The issue seems much more problematic in the medium to long term. 

In fact, the price of gold has once again risen to historic highs, indicating a significant concern in the markets regarding the medium to long term. This would be compatible with a strong bear-market in 2026. 

As for the long term, Bitcoin seems to continue following its four-year cycle, which until now has always recorded a strong bull run at the end of the year following the US elections – except in 2009 when it was not yet tradable on exchanges – followed by a year of strong bear market. 

It should be noted that so far all three major bear markets of BTC (2014, 2018, and 2022) have concluded with a powerful rebound, which then ended in the following years with new all-time highs.