This issue is sponsored by Cactus

What we will talk about today...

Bitcoin Reaches $62.6K as Fed Rate Cut Triggers Warnings

Bitcoin surged to $62,600 following a rare 0.5% rate cut by the U.S. Federal Reserve, raising concerns about potential volatility ahead for both BTC and the stock market.

• Main Points:

  • Fed rate cut fuels BTC rally: Bitcoin hit $62,600 after the Federal Reserve enacted a significant 0.5% interest rate cut.

  • Resistance levels in focus: BTC faces resistance at $62,500, with further upside potentially targeting $65,000.

  • Market volatility expected: Analysts warn that the rate cut could signal deeper market concerns, with historical precedent showing major stock declines after similar cuts.

• Detailed Insights:

  • Fed rate cut fuels BTC rally: The U.S. Federal Reserve’s 0.5% interest rate cut on Sept. 19, a rare move in its history, sent Bitcoin soaring to $62,600. The reduction, intended to stimulate the economy, marked only the third time the Fed began a rate-cutting cycle with such a significant drop. BTC’s surge liquidated $128 million in short positions, according to CoinGlass, indicating strong momentum in the crypto market.

  • Resistance levels in focus: Despite the upward movement, BTC faces stiff resistance. Popular trader Jelle noted that breaking above $62,500 could signal a stronger rally toward $65,000. However, analysts urge caution, with potential profit-taking and reduced leverage as the market approaches key resistance zones.

  • Market volatility expected: While the Fed’s rate cut seemingly boosts liquidity, it could signal underlying economic concerns. The Kobeissi Letter pointed out that previous instances of similar cuts in 2001 and 2007 preceded significant stock market crashes, with declines of 31% and 26%, respectively, within two years. This raises questions about whether the Fed’s optimistic economic outlook aligns with the drastic policy shift.

Related: Bitcoin's Road to $1 Trillion Market Cap – BlackRock Report

Crypto is the only way out of endless inflation and the devaluation of money.

If you share this view and read our newsletter regularly, then you should also take a look at our colleagues from the Cactus Newsletter.
They deliver a free weekly newsletter with market analyses on Bitcoin, Solana, and currently popular memecoins.
They have also been persuaded to offer an extra perk for BitcoinZella readers: The first 50 people who sign up to Cactus via our link will be entered into a prize draw to win one $SOL! Sounds nice?

Subscribe now

WHAT WE RECOMMEND😉

To have an Invested Mind, we need Entertainment. Here are some Entertaining, Exciting, and Useful sites for You

Just Clicking The Subscribe Button Helps Us Continue
For Free Forever

Bitcoin Flashes Bullish Signal — But There's a Catch

Bitcoin has moved above the daily Ichimoku cloud, signaling potential bullish momentum, but key indicators suggest caution as the cloud remains in bearish territory.

• Main Points:

  • BTC above daily Ichimoku cloud: A potential bullish signal, but the cloud is still in bearish territory.

  • Tenkan-Kijun downside risk: Indicators point to possible further price decline.

  • Past Kumo breakouts: Recent cloud breakouts haven’t led to significant gains.

  • Current BTC price: Trading at $61,986, up 2.9% in the last 24 hours.

• Detailed Insights:

  • BTC above daily Ichimoku cloud: Cryptocurrency trader Josh Olszewicz recently pointed out that Bitcoin has broken above the daily Ichimoku cloud, which typically suggests bullish sentiment. However, despite this positive development, the cloud itself remains bearish, signaling that the market may not fully confirm the upward trend just yet.

  • Tenkan-Kijun downside risk: Olszewicz also highlighted that the Tenkan-Kijun (TK) indicator could still point to further downside, as the cloud does not show a bullish formation. For a more confident bullish continuation, traders are looking for a confirmed bullish cloud pattern and a bullish TK cross.

  • Past Kumo breakouts: Despite the current bullish setup, Olszewicz warned that previous Kumo breakouts earlier this year did not result in sustained rallies. This raises concerns about the reliability of this breakout as a clear indicator of continued upside.

  • Current BTC price: At the time of writing, Bitcoin is trading at $61,986, marking a 2.9% gain over the past 24 hours. While the price shows short-term strength, analysts are urging caution until the Ichimoku cloud and TK indicators confirm a stronger bullish signal.

Related: MicroStrategy’s Bitcoin Play: Should You Follow Saylor’s Lead?

Bitcoin Seen as 'Unique Diversifier,' Says BlackRock Report

BlackRock's latest report highlights Bitcoin as a valuable portfolio diversifier, emphasizing its distinct risk and return profile compared to traditional financial assets. The report explores Bitcoin's growing appeal among institutional investors and underscores its potential for long-term portfolio diversification.

• Main Points:

  • Bitcoin as a portfolio diversifier: BlackRock describes Bitcoin as a non-sovereign, decentralized asset with risk and return factors that differ from traditional equities and bonds.

    Institutional demand for Bitcoin: BlackRock’s spot Bitcoin ETF now holds 357,550.21 BTC, valued at approximately $21.5 billion.

  • Bitcoin’s uncorrelated performance: Although Bitcoin shows short-term correlations with broader markets, it tends to decouple in the long term, recovering quickly from market downturns.

  • Managing Bitcoin’s volatility: The report suggests that small allocations of Bitcoin can improve risk-adjusted returns in a diversified portfolio.

• Detailed Insights:

  • BlackRock, the world’s largest asset manager with $10.65 trillion in assets under management (AUM), has identified Bitcoin as a key asset for long-term portfolio diversification. In its latest research report, the firm underscores Bitcoin's role as a unique investment vehicle, distinct from traditional financial assets like stocks and bonds.

  • The report emphasizes that Bitcoin’s decentralized, fixed-supply nature makes it fundamentally uncorrelated to other markets over the long term. Unlike assets that are influenced by government policies or central bank actions, Bitcoin operates independently of traditional macroeconomic forces.

  • While the report acknowledges that Bitcoin can mirror broader market trends during short-term sell-offs—such as the 7% drop on August 5, 2024, which coincided with a 3% decline in the S&P 500—it highlights Bitcoin’s resilience. The cryptocurrency often rebounds quickly from sharp declines, making it a useful hedge during periods of market volatility.

  • Institutional Interest and ETF Growth:

    The increasing demand for Bitcoin is reflected in BlackRock’s spot Bitcoin exchange-traded fund (ETF), which now holds 357,550.21 BTC, valued at $21.5 billion. This growing institutional interest reinforces the idea that Bitcoin is gaining traction among major investors who see its potential for diversification.

  • Managing Bitcoin’s Risks:

    While the report recognizes the challenges associated with Bitcoin, including regulatory uncertainty and volatility, BlackRock’s researchers argue that prudent position sizing can mitigate these risks. The report demonstrates that, when held in smaller allocations, Bitcoin can enhance a portfolio’s risk-adjusted returns without significantly increasing volatility.

Related: How U.S. Bitcoin and Ethereum Investors Are Prepping for the FOMC Meeting

CAN YOU PREDICT THE PRICE?

HOW DID WE DO? 🤷

Stay Tuned For More Twists and Turns in
🚀The Crypto World & Happy Investing🚀

This article is not financial advice. Market conditions can change rapidly, and past performance does not guarantee future results