Tomorrow at 2 AM, the Federal Reserve will hold its policy meeting, followed by a speech from Powell. This policy meeting is highly anticipated because, since the rate cut in December last year, there have been no further rate cuts to date, making this the first rate cut of the year. Although there has been no rate cut this year, the stock market and cryptocurrencies have continued to set new highs, and the market has already priced in some expectations of a rate cut. So, after this first rate cut, will it be a positive outcome or the start of a new bull market?

Focus Points of the Policy Meeting

According to the Fed's watch tool, the probability of a rate cut is 100%, but it is still uncertain whether it will be a 25 basis point cut or a 50 basis point cut.

The probability of a 25 basis point cut is 96%, while the probability of a 50 basis point cut is 4%;

Powell's speech and the "dot plot" of the Fed officials' interest rate projections are the key focus points of this decision.

Dot Plot: The median interest rate for 2025 is expected to be lowered to 4.125%, indicating a more dovish policy stance. However, the median interest rate for 2026 is likely to remain at 3.375%, with some committee members possibly raising it to 3.625%, reflecting concerns about sticky inflation.

Powell's Speech: Powell's attitude towards the "rate cut pace" is the biggest highlight. If he takes an hawkish stance, emphasizing inflation concerns, the market will reduce expectations for future Fed rate cuts, putting pressure on the stock market. If he delivers a more dovish statement than expected, the market will quickly price in an aggressive rate-cut cycle, causing the dollar index to plummet.

Additionally, Stephen Miran, Trump's economic advisor, may be confirmed as a Fed governor this week and participate in decision-making.

BTC Price Analysis

Volume and Price Analysis: The volume performance worth noting for BTC's movement is on August 22nd and the past week, which shows the intentions of the major players. On August 22nd, there was a sudden surge in volume and a sharp increase, but it was blocked at 117,500 and then continued to decline. This can be understood as a typical buying climax and a hedge against short selling by the market makers, so 117,500 has always been a key resistance level.

Recently, on September 12th, there was a surge in volume, but it still failed to break through. Although the price has risen recently, the volume has not kept up, showing a potential risk signal. If the volume fails to keep up with the subsequent price increases, it could lead to a false breakout. The key resistance levels above are 119,000-120,000.

Indicator Convergence: The moving averages and RSI show a slightly bullish trend. Key support levels to watch are between 115,000-116,000; if it breaks below, it will break the bullish sentiment.

Pattern Preview: The current BTC rebound has formed a head-and-shoulders bottom structure, currently constrained near the neckline at 117,500. If it strongly holds above, it will face a higher-level head-and-shoulders bottom neckline at 119,000-120,000. If it continues to fail to break through, it may test the support level of 113,000-115,000, forming a larger-scale consolidation and washout trend until one day the support and resistance levels are broken.

Author: Aaron, ChainThink