Bitcoin’s (BTC) price consolidation indicates a significant move is on the horizon, but the direction is uncertain, according to a crypto trader.
Two speculative events could influence the outcome. One is the possibility of further rate cuts by the US Federal Reserve, and the other is the potential sale of more seized Silk Road Bitcoin by the US government.
“Bitcoin is showing signs of compression again after trading at the same price level for the past few days,” pseudonymous crypto trader Daan Crypto Trades stated in an Oct. 9 post as Bitcoin hovered around $62,000.
Bitcoin is trading at $61,920, down 0.38% over the past 24 hours. Source: TradingView
“Large” move anticipated for Bitcoin either way
Daan Crypto Trades believes that Bitcoin’s “next move is likely to be significant.”
He noted that the direction is uncertain and could go either way.
“The best approach is to wait for confirmation in times like these,” he added — advising traders to hold off from buying or selling Bitcoin until more definitive signals appear on the price chart.
Meanwhile, there is anticipation in the market that the US Federal Reserve may continue reducing interest rates following a 50 basis points cut on Sept. 18, a move widely expected by investors and analysts.
Further rate cuts are generally seen as positive for crypto assets as traditional safe investments like term deposits become less attractive to investors.
HSBC is predicting a 25 basis point cut in the coming months, according to the ForexLive report.
While rate cuts by the Fed are viewed as favorable for riskier assets like crypto, there are concerns about the impact on USD holders.
“The Fed has started cutting rates. What does that mean? Financial authorities have decided who is paying for their mistakes: those holding US dollars,” Strike CEO Jack Mallers remarked.
Additionally, Marketwise founder Porter Stansberry warned that Fed rate cuts could lead to higher inflation and interest rates, potentially harming USD holders.
US government selling seized Silk Road BTC
There are concerns that the US government might sell a substantial amount of seized Bitcoin from Silk Road following a recent court decision.
On Oct. 8, the US Supreme Court declined to hear a case regarding the ownership of 69,370 Bitcoin seized from Silk Road.
Battle Born Investments claimed rights to the seized Bitcoin but the court denied their request.
Bitget’s chief analyst, Ryan Lee, believes the sale could impact Bitcoin’s price both in the short term and long term.
“Market sentiment may be affected by the sudden increase in supply, leading to a temporary drop in Bitcoin’s price,” Lee explained.
The influx of sold Bitcoin could put downward pressure on prices if sold on the open market, according to Lee.
This article does not offer investment advice. Readers should conduct their own research before making investment decisions.