Bitcoin Rises. Why the Crypto May Drop Below $90,000, Even After a Fed Rate Cut. — Barrons.com
By Jack DentonBitcoin and other cryptocurrencies advanced on Wednesday ahead of a widely expected interest-rate cut from the Federal Reserve, which should boost sentiment across markets.But crypto traders may be facing the possibility of a decline in Bitcoin prices even if the Fed cuts rates.The price of Bitcoin rose 2.5% over the past 24 hours to $92,700. Bitcoin convincingly ran back up above the key $90,000 price level on Sunday but remains down by more than a third from its record high in October."Bitcoin has broken through the ceiling of a falling trend channel in the short term," wrote investing platform Investtech based on an analysis of technical market indicators for Bitcoin. "The currency has support at points $84,000 and resistance at points $107, 000. The currency is assessed as technically slightly negative for the short term."The Fed is widely expected to cut rates by a quarter-point on Wednesday, but investors may be more focused on a speech from Fed Chair Jerome Powell and a summary of central bank officials' economic projections.The question of whether interest-rate cuts will continue in 2026 — marking a further reduction in borrowing costs that should boost Bitcoin as well as risk sentiment more broadly — remains uncertain.If remarks from Powell or the Fed's summary of economic projections paints a picture of a central bank that may not cut rates much, or at all, in 2026, Bitcoin could suffer as one of the leading-edge risk assets.Crypto traders may be preparing for that negative possibility. Evidence in the Bitcoin options market — where traders bet on specific future price moves — suggests bearish sentiment with preparations for a price drop.There is a concentration of "puts" — contracts that pay out if prices drop to a specific level or "strike price" by a certain expiration date — for Bitcoin at $89,000 by Thursday, based on open interest levels on the exchange Deribit.The $89,000 level is the most popular strike price by open interest of any option expiring on Thursday, with overall more puts than calls — bullish bets on a higher strike price — in the Deribit options market.Beyond Bitcoin, Ethereum — the second-largest crypto by market capitalization — jumped 6.5% to above $3,300. Smaller cryptos or altcoins were also buoyant, with Ripple up 1%, Solana surging 4%, and Dogecoin advancing 4%.This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.