Bitcoin Poised for Rally as Fed Rate Cut Looms, Predicts Capriole Investments

According to Cointelegraph: Bitcoin (BTC) could quickly surge to $64,000 as the U.S. Federal Reserve prepares to announce its first interest rate cut since the pandemic, according to Capriole Investments. The digital asset fund suggests that Bitcoin is on the verge of resuming its bull market performance, driven by macroeconomic factors and historical cycle patterns.Capriole Founder Predicts Swift Return to $64KCharles Edwards, founder of Capriole Investments, believes that Bitcoin is primed to benefit from macroeconomic shifts in Q4, which is historically its best-performing quarter. Edwards argues that the anticipated interest rate cut at the Federal Reserve's September 18 meeting could catalyze Bitcoin’s next upward move.“This marks the start of a new dovish Fed policy regime, the first significant change since late 2021,” Edwards explained in Capriole's latest report. He noted that the previous hawkish stance, which saw interest rates rise from 0% to 5.5% in just 18 months, coincided with Bitcoin’s decline from $60,000 to $15,000.With the Fed expected to shift towards more accommodative policies, Bitcoin could see rapid gains, Edwards suggested. "A weekly close above $64K would end the seven-month sequence of lower highs and likely see us travel back to range highs ($70K) with haste, and probably beyond," he added.Bitcoin's Mixed Technical PictureWhile Bitcoin has preserved support levels around $58,000, Edwards remains cautious, pointing out that technical indicators remain mixed. Despite this, he is optimistic about Bitcoin's potential to break higher, especially if the Federal Reserve delivers a dovish surprise."I would not be surprised to see that level ($64K) taken very quickly to the upside, provided no bearish surprises from Chairman Powell tomorrow," Edwards stated.Onchain Data Misleading Due to External FactorsCapriole's report also addresses concerns over recent Bitcoin supply trends, suggesting that external factors like the launch of U.S. spot Bitcoin exchange-traded funds (ETFs) and the Mt. Gox rehabilitation process have skewed on-chain metrics.“2024 has seen massive capital redistribution due to the ETF launch and Mt Gox,” Edwards noted, explaining that these events have distorted supply metrics and presented a false narrative about long-term holders selling their assets.Edwards cautioned that metrics classifying holders based on the length of time they’ve held Bitcoin, such as "long-term holder" and "short-term holder" data, are unreliable this year. "Any on-chain metrics with ‘long-term holder’ data, or ‘supply last active more than XX months/years’ cannot be trusted in 2024," the report stated.Positive Mid-Term Outlook for BitcoinDespite the challenges with interpreting on-chain data, Edwards remains bullish about Bitcoin’s mid-term prospects. He emphasized that Bitcoin is trading within 2% of Capriole's last update and that the overall market remains at a "major pivot point."Edwards highlighted the favourable timing of potential Fed policy easing and historical Bitcoin performance, particularly in the fourth quarter and post-halving periods. He added that Bitcoin’s best two quarters are traditionally just weeks away, providing further optimism for a sustained rally.“We also have Gold paving consistent new all-time highs since its breakout a few months ago. You couldn’t ask for more favorable conditions for Bitcoin,” Edwards concluded.With growing liquidity expected to flow into risk assets and a dovish Fed policy likely to take hold, Capriole Investments predicts a strong tailwind for Bitcoin in the months ahead.