Bitcoin rises amid softer Fed policy expectations
Bitcoin strengthened noticeably in early October and once again consolidated above the important psychological mark of $85,000. On October 2, the cryptocurrency was trading roughly in the range of $85.5–86.4 thousand, and intraday it rose to $86,807. Thus, after several unsuccessful attempts, buyers were able to overcome the strong supply zone around $85,000.
One of the main factors supporting BTC now is the change in expectations regarding the future policy of the US Federal Reserve System.
How the Fed rate hike affected bitcoin
On September 16, the Fed raised the target range for its key interest rate by 0.25 percentage point to 3.75–4% per annum. This was the first rate hike in three years. The regulator explained the decision by persistent inflation and the need to return it to the target of 2%. At first glance, the rate hike should have been a negative factor for bitcoin. More expensive money usually means higher bond yields and lower attractiveness of risk assets, including cryptocurrencies. However, BTC's reaction turned out to be mixed. Since the Fed meeting on September 16, when bitcoin was around $75,600, it has risen by about 13% and by early October climbed above $85,000.
The reason is that the market assesses not only the already implemented rate hike, but also the future trajectory of monetary policy.
In recent days, Fed officials have given the market more cautious signals. Fed Vice Chair Philip Jefferson said the regulator may need more time to assess economic data before further policy changes. After these statements, the likelihood of another imminent rate hike decreased.
Additional support for bitcoin came from US inflation statistics. The PCE index in August rose by 0.3% month-on-month versus 0.4% expected, and core PCE was 3% year-on-year. More moderate inflation reduced pressure on the Fed and allowed markets to lower expectations of another rate hike.
Middle East remains a risk factor
The situation in the Middle East continues to influence global financial markets. Military tensions around Iran and risks to energy supplies keep oil prices high.
On October 2, Brent was trading around $101 per barrel, despite some decline in prices during the day. Continuing uncertainty around oil supplies and shipping security forces investors to factor in an elevated geopolitical premium in prices. For bitcoin, the impact of this factor is twofold. On the one hand, geopolitical instability may stimulate interest in alternative assets and support demand for cryptocurrency. On the other hand, a sharp rise in oil prices could strengthen inflation in the US and other economies, potentially forcing central banks to keep monetary policy tight for longer.
That is why for BTC now the oil → inflation → US bond yields → Fed expectations chain is especially important.
Nearest resistance levels for bitcoin
The technical picture now looks significantly better than a few weeks ago. The break above $85,000 was an important event: this area had stopped buyers several times before. According to technical analysis on October 2, the nearest resistance is around $86,900, then levels $87,700–88,000.
Thus, the nearest targets can be presented as follows:
- $86 800–87 000 — first significant resistance;
- $87 700–88 000 — next sellers' zone;
- $90 000 — important psychological and technical level;
- after a confident consolidation above $90 000, market attention may shift to higher levels, particularly around $95 000.
However, breaking resistance does not yet guarantee a continued rally. For bulls, it is important not only to climb above $86–88 thousand, but also to hold the achieved levels. Technical analysis on October 2 points to the nearest support at approximately $84,400, and the next at about $82,500.
