Fed Rate Cut Boosts Bitcoin Price Ahead Of Q4 Melt-Up

Bitcoin’s price tends to peak around 20 months after a Bitcoin halving, and with the last halving occurring in April 2024, we could potentially see a cycle top by December of this year.

The recent rate cut by Fed Chair Powell has sparked interest in moving funds from money market accounts (with approximately $7.4 trillion) into hard assets like bitcoin, especially with the increasing accessibility of bitcoin through spot bitcoin ETFs and bitcoin treasury companies.

Powell’s indication of two more rate cuts before the year ends may further drive investors towards hard assets like bitcoin and gold, as well as riskier assets like tech and AI-related stocks. This could lead to a final “melt-up” phase similar to the tech stock boom of 1999 before the dot com bubble burst.

Experts like Henrik Zeberg and David Hunter foresee a parabolic rise in the S&P 500 index, with Zeberg predicting a level exceeding 7,000 and Hunter projecting a rise to 8,000 or higher by the end of the year.

Macro Strategist Octavio Costa suggests that a 14-year support level for the US dollar is breaking down, which could result in a weaker dollar in the coming months, further supporting the bull case for hard and risk assets.

What Happens Come 2026?

Zeberg and Hunter anticipate a significant market bust in early 2026, with Zeberg pointing towards a halt in the real economy evidenced by factors like the housing market. Hunter predicts the end of a long debt-fueled cycle that will result in a historic leverage unwind.

Signals like loan delinquencies also indicate a slowdown in the real economy, which could have repercussions in the financial economy.

The Bitcoin Downturn Isn’t Guaranteed, but It’s Likely

If history repeats itself, bitcoin’s price could experience a downturn in 2026. Previous instances saw significant drops in bitcoin’s price, with the price hitting or dipping below its 200 Week Standard Moving Average.

Currently, bitcoin’s 200 Week SMA is around $52,000, suggesting a potential rise to $65,000 before a subsequent drop in price in 2026. In the event of a market bust as predicted by Zeberg and Hunter, bitcoin’s price could plummet further.

While the future is uncertain, it’s essential to consider historical patterns in the market. Remember, history often rhymes, even if it doesn’t repeat itself.