On Thursday, new inflation and labor data from the United States further supported expectations that the Fed will begin cutting interest rates next week, with financial asset prices trending higher.

The US August Producer Price Index (PPI) report showed that wholesale prices rose by 0.2% pump on a month-on-month basis, slightly higher than economists' expectations, while rising by 1.7% pump year-on-year, in line with expectations.

The market currently expects the Federal Reserve to cut interest rates by 25 basis points next week, but some traders still hope for a 50 basis point cut. The FedWatch Tool from the Chicago Mercantile Exchange (CME) gives a 28% probability of a 50BP rate cut, higher than yesterday's 14%.

The three major US stock indexes closed pump, with the S&P, Dow Jones, and Nasdaq indexes pumping 0.75%, 0.58%, and 1.00% respectively. Spot gold soared 1.91% during the trading session, setting a new historical high just below $2,560 per ounce.

The Bitpush data shows that BTC (BTC) surged to above $58,000 in early Thursday trading, fell to a low of $57,310 at midday, and long positions successfully pushed the price back above $58,000 in the afternoon, challenging the resistance level of $59,000.

As of the time of writing, the BTC trading price is $58,217, with a 24-hour increase of 1.53%.

In the Altcoin market, Tokens ranked in the top 200 by Market Cap have seen a general increase. The largest increase is Worldcoin (WLD), with a growth rate of 14.6%; followed by Trust Wallet Token (TWT) with a growth rate of 14.3%; Sui (SUI) with a growth rate of 13.9%. The biggest decrease is GMT (GMT) with a decline of 6.2%; SuperVerse with a decline of 5%; ConstitutionDAO (PEOPLE) with a decline of 4.3%.

The current market capitalization of the cryptocurrency is 2.05 trillion US dollars, and BTC's market share is 56.3%.

Expected Fluctuation

Market analyst Bloodgood said that the CPI and PPI inflation data released this week is not much different from the forecast. The Fed seems to be entering a fairly orderly rate-cutting cycle, which should be very favorable for risk assets.

Bloodgood pointed out that, from a historical perspective, interest rate cuts "often come with some initial downward Fluctuation, but considering the upcoming election, this Fluctuation should weaken. Unless there are some truly unexpected economic developments, the macroeconomic outlook for the fourth quarter still looks bullish from a fundamental perspective."

Regarding BTC, Bloodgood pointed out that since last week, the BTC price has fallen to around $50,000, but long positions have intervened to 'save the situation' because this pullback is not as quick as in early August, indicating that short positions are exhausted.

Bloodgood concluded: "As of writing, BTC is below the breakout area, which is a key level in the recent trend. Breaking this level will quickly lead to higher levels, while falling below it will likely test $50,000 in the coming weeks. From a TA perspective, the structure still looks bearish, so I won't be hopeful until the lower high is broken."

TradingView analyst TradingShot said that the rate cut will lead to an increase in global Money Supply, which could be a factor driving the next pump of BTC.

TradingShot says, "With the Fed preparing for its first rate cut since the start of the rate hike cycle in February 2022, it will be very exciting to see what the global Money Supply and more circulating currencies mean for Bitcoin."

In the figure above, the light green and red candles (at the top) represent the Global Liquidity Index (GLI), composed of the Federal Reserve, TGA, RRP, European Central Bank, People's Bank of China, Japanese Central Bank, Bank of England and other central banks. The icon tracks and measures the liquidity / money supply / circulation of currency in the global economy.

TradingShot said: 'When the Central Bank cuts interest rates, they are actually printing more money, injecting a large amount of cash into the system, causing the depreciation of the currency in circulation. When this happens, companies and/or individuals are more likely to obtain more funds through loans and other means, thereby increasing their spending/purchasing/investment capacity. In principle, this means that investors are more likely to purchase higher-risk assets, leading to a pump in value. Stocks and Crypto Assets belong to this category.'

"As this chart shows, it's not surprising that BTC (the candle at the bottom) pumps whenever GLI starts pumping, and more specifically, when Liquidity drops and plateaus, a Bear Market cycle for BTC is formed, and when it breaks through the resistance level, BTC starts the Rebound phase of its Bull Market cycle," TradingShot analysis said. After the Fed's aggressive rate hikes sent us back to pre-2008 housing crisis levels, GLI experienced a stronger decline, and instead of flattening, it formed a wedge with lower highs as resistance. The GLI is now right on this lower high trendline, and if breached, we could have a breakout similar to the previous cycle resistance breakout, triggering a parabolic rebound for BTC."

SDM analysts believe that BTC has rebounded from the support level of $56,600, which is consistent with the bullish crossover observed on the 4-hour chart, where the 20-day and 50-day Moving Averages (MA) intersect. Additionally, the oscillation indicator within the same time frame shows a bullish divergence, indicating a potential upward reversal in the short term. However, although technical indicators can provide insights into trends, relying solely on these indicators is not enough to accurately predict future trends. Whether the rebound will drive BTC to break through the key level of $60,000 and reach the upper limit of the six-month trading range remains to be seen.

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