Bitcoin (BTC) is expected to recover to $64,000 “very quickly” as the U.S. Federal Reserve cuts interest rates.
Capriole Investments, a quantitative Bitcoin and digital asset fund, said in its latest monthly update report released on September 17 that BTC price action is at a critical crossroads.
Capriole Founder: ‘I Wouldn’t Be Surprised’ by BTC Price at $64,000
Capriole Investments founder Charles Edwards expects Bitcoin to benefit exponentially in Q4 due to macroeconomic changes. Q4 will be the best quarter for the market.
BTC/USD, which was barely moving last month, is now expected to resume its classic bullish move if the Fed cuts rates at its September 18 meeting.
“This signals the beginning of a new, dovish Fed policy regime and is the first significant change since the Fed signaled a tougher policy stance in late 2021, raising interest rates from 0% to 5.5% in just 18 months,” the report said.
“This Hockney regime also coincided with the Bitcoin crash from $60,000 to $15,000. We are now at the beginning of the opposite regime.”
Barring a “bearish surprise” from the Fed, BTC/USD is targeting $64,000 while maintaining weekly support, according to data from Cointelegraph Markets Pro and TradingView.
“While ugly and still in a lower high and lower low (a pure “bearish”) trend, weekly support is responding well today at $58K. A weekly close above $64K would end the 7-month low high sequence and likely send us back to the range high ($70K) in a hurry, and possibly beyond. Still, the technical picture is mixed at best and bearish at worst, until the range (and monthly resistance at $60K) are recaptured,” Edwards continued.
“Based on the current reaction to the weekly $58K level, and given the key Fed meeting tomorrow, I would expect that level to move up very quickly unless there is a bearish surprise from Powell tomorrow.”
BTC/USD 1-week chart. Source: TradingView
Bitcoin on-chain supply data is also too weak
The report dismisses concerns about changes in BTC supply trends, arguing that new phenomena such as U.S. spot Bitcoin exchange-traded funds (ETFs) have distorted the perspective.
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“In 2024, there was a massive capital redistribution as a result of ETF launches and Mt Gox. This capital movement misrepresented many on-chain metrics and told a false story,” Edwards argued.
Furthermore, the findings suggest that data covering dormant supply ownership – a metric that gives rise to popular “long-term holder” and “short-term holder” cohorts – may be unreliable in 2024.
“Simply put, over the past 6 months, on-chain metrics have been massively ‘manipulated’ due to the massive supply rebalancing, with no significant organic long-term selling from net longs. This has resulted in many on-chain metrics showing extremely bearish readings, similar to previous cycle peaks, as discussed in Update 52 two months ago,” the report states.
“This means that on-chain metrics like ‘long-term holder’ data or ‘supply last active over XX months/years’ will be unreliable in 2024. However, these classifications form a significant portion of valuable on-chain metrics.”
BTC supply data (screenshot). Source: Capriole Investments
Edwards, on the other hand, expects BTC/USD to remain bullish in the medium term.
“Our view that Bitcoin is at a major turning point, as seen in Issue 53, remains valid, as it is trading within 2% of the last update,” he concluded.
He cited the timing of the Fed’s policy easing. Traditionally, Bitcoin performs best in Q4, and BTC/USD is also due to end its standard consolidation period following the halving.
“What’s next? The two best quarters of the season are just two weeks away. This is within the best 12-18 month window for Bitcoin allocations every four years, and the beginning of a dovish Fed multi-year regime that sees more and more liquidity injected into risk assets,” he wrote.
“We also have gold, which has been hitting new all-time highs since its breakout a few months ago. You couldn’t ask for more favorable conditions for Bitcoin.”
BTC/USD Quarterly Returns (Screenshot). Source: Capriole Investments
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.