Bitcoin rallies as dovish Fed comments slash October rate hike odds

FUNDAMENTAL OVERVIEW

Since last Wednesday, Bitcoin had been trading in a sideways pattern. However, this week's dovish remarks from the Fed's Williams and Jefferson lent support to the digital currency, even amid the ongoing standoff between the US and Iran.

Williams serves as the head of the New York Fed, while Jefferson holds the position of Vice Chair at the Fed. Both are members of the so-called troika, alongside the Fed Chair.

Their statements carry significant weight and led to a dovish shift in market expectations, with the probability of an October rate cut falling from 70% to approximately 25%.

Bitcoin has continued to climb this morning following a key technical breakout. Going forward, attention will be on US-Iran developments and the Fed.

Should negotiations make progress, Bitcoin could get additional support as expectations for aggressive Fed tightening are likely to diminish. On the flip side, a drawn-out stalemate or an escalation would probably cap gains, unless the Fed remains more dovish than anticipated.

The US NFP report is also due today. After the comments from Fed officials Williams and Jefferson, a blockbuster report that beats forecasts on all fronts would be needed to boost the chances of an October cut again. Such a result could put pressure on Bitcoin in the near term, triggering another hawkish repricing.

Data that matches or falls short of expectations, however, would likely offer support and extend the recent rally.

BITCOIN TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, Bitcoin bounced off the former resistance-turned-support zone near the 82,500 level. Should the price pull back again into that support and the upward trendline, buyers are expected to step in, with risk defined below the trendline, positioning for a move to the 98,000 level. Sellers, meanwhile, would like to see the price break below the trendline to build positions for a decline to the 76,000 support.

BITCOIN TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, the price broke out of the 82,500 to 85,000 range this morning. If a pullback occurs, buyers are expected to enter around the 85,000 support, with defined risk below that level, aiming to push to new highs. Sellers, on the other hand, would want the price to fall back below support to extend the pullback toward the major upward trendline.

BITCOIN TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, the buyers have a better risk-to-reward setup around the 85,000 support or the major trendline to continue targeting new highs, while sellers need downside breaks to position for new lows. The red lines mark the average daily range for today.

UPCOMING CATALYSTS

The week wraps up today with the US NFP report.