Key Insights:
- Cooling US PCE inflation strengthens expectations for further Fed rate cuts, boosting Bitcoin’s bullish outlook for the fourth quarter.
- Matrixport forecasts a strong Bitcoin rally in Q4, driven by historical performance, rate cuts, and growing market liquidity.
- Bitcoin’s breakout above $65,000 sets a bullish trend, with analysts targeting key resistance levels at $68,000 and $70,000.
The latest Personal Consumption Expenditures (PCE) data released by the U.S. Bureau of Economic Analysis on September 27 shows that inflation in the United States has cooled further. The PCE, a key inflation measure closely watched by the Federal Reserve, fell to 2.2% in August, down from 2.5% in the previous month. This decline has sparked expectations of additional interest rate cuts by the Fed, which could provide a supportive environment for risk assets like Bitcoin.
With Q4 historically being a bullish period for the cryptocurrency market, analysts from firms such as Matrixport and QCP Capital are forecasting a strong Bitcoin price rally in the coming months. Market participants are now eyeing the possibility of Bitcoin reaching $100,000 as favorable macroeconomic conditions align with a positive technical outlook.
PCE Inflation Decline Bolsters Case for Fed Rate Cuts
The latest PCE data suggests a continued slowdown in inflation, which could prompt further rate cuts by the Federal Reserve. The annual PCE rate fell to 2.2%, slightly below market expectations of 2.3%, while the core PCE inflation rate, which excludes food and energy, rose to 2.7%, in line with forecasts. Month-over-month, core PCE inflation registered a modest 0.1% increase, down from 0.2% in July.
This cooling of inflation supports the case for additional monetary easing by the Fed, which recently cut interest rates by 50 basis points. The CME FedWatch tool indicates that the probability of another 50 bps rate cut in November has increased, which is seen as a potential catalyst for further gains in the crypto market. Lower rates typically encourage investment in riskier assets, including cryptocurrencies, by making borrowing cheaper and increasing liquidity.
Matrixport and QCP Capital Predict Bullish Q4 for Bitcoin
Matrixport, known for accurately predicting Bitcoin’s price movements in past rallies, has released an optimistic outlook for Bitcoin in Q4. The research firm expects a continuation of Bitcoin’s positive momentum, driven by factors such as Federal Reserve rate cuts, China’s economic stimulus, and increased institutional adoption through spot Bitcoin ETFs.
Historically, Bitcoin has shown strong performance in the fourth quarter, with average gains of around 40% from October to March over the past decade. Matrixport analysts believe these historical trends, combined with current market conditions, could propel Bitcoin’s price higher in the coming months. A key technical development supporting this view is Bitcoin’s recent breakout above the $65,000 level, which has now been flipped into a key support.
QCP Capital also sees a supportive macro environment for Bitcoin and other risk assets. The firm highlights that Bitcoin has broken above a descending trendline, setting the stage for a potential move toward $70,000. On-chain data suggests that there is sufficient liquidity to support Bitcoin’s rise to $68,000, with further upside likely if this level is breached.
Market Liquidity and Technical Indicators Signal Further Gains
Bitcoin’s price movement is closely linked to broader market dynamics, including the U.S. dollar index (DXY) and Treasury yields. The DXY has been volatile, hovering around the 100.5 mark, while the 10-year U.S. Treasury yield has recently dipped to 3.77%. Historically, Bitcoin’s price has moved inversely to the DXY and Treasury yields, with lower yields and a weaker dollar often providing a tailwind for Bitcoin.
The ongoing increase in Bitcoin futures open interest and rising trading volumes further support the case for a sustained rally. Coinglass data shows that traders are liquidating their short positions, and open interest has reached $36.38 billion, approaching levels seen in March. This suggests growing confidence among traders as they position for further upside.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.