Bitcoin stalls around $110,000; Fed rate cut may not spark rally, analyst says

Bitcoin's price remains tightly range-bound around $110,000, reflecting a subdued market awaiting next week's highly anticipated U.S. interest rate decision.

According to The Block's crypto price page , bitcoin rose 0.44% in the past 24 hours to trade at $111,074 as of 12:22 a.m. on Monday. 

The prices came in sticky despite the fact that August's nonfarm payrolls in the U.S. rose by 22,000, significantly under the estimated 75,000. The weaker data indicates that the U.S. economy may be cooling down, which could give the Federal Reserve more reason to consider an interest rate cut.

As the Federal Reserve's rate decision on September 17 draws near, the CME FedWatch Tool indicates a 100% probability of a rate cut. While a 25 basis point reduction is widely expected, the tool shows a 10% chance that the Fed opts for a larger 50-basis-point cut.

"The soft U.S. jobs report did create expectations for a more dovish US Federal Reserve, which is normally supportive for risk assets like bitcoin," said Rachael Lucas, crypto analyst at BTC Markets. "However, the market had already priced in some degree of policy easing. At the same time, we're seeing profit-taking by institutional desks, while ETF flows remain relatively flat."

Lucas said the combination of the two has currently capped bitcoin's upward momentum, keeping the cryptocurrency consolidating in a tight range.

Even if the Fed decides to lower rates, bitcoin prices could remain subdued, Kronos Research CIO Vincent Liu told The Block.

"A cut may reflect economic weakness, while sticky inflation and cautious risk sentiment limit risk appetite," Liu said. "Without stronger ETF inflows or real liquidity expansion, $120K+ remains a tough barrier."

Both bitcoin and Ethereum exchange-traded funds saw weaker flows in the first week of September compared to August or July, when inflows hit record highs. As the current market cycle has been largely driven by institutional capital, less robust ETF flows may reflect a cooling in overall market momentum.

Signs to watch

Meanwhile, BTC Markets' Lucas said the current key support is at $110,000. 

"As long as Bitcoin holds that level, market structure remains constructive," Lucas said. "Resistance sits at $113,400, with further levels at $115,400 and $117,100. Breaking those barriers would suggest the market has absorbed recent selling pressure and is ready to retest the highs."

Beyond next week's FOMC meeting, analysts advised traders to watch for both on-chain and off-chain potential market catalysts.

"On-chain, stablecoin supply is near record highs, creating dry powder for potential rallies, while exchange balances for bitcoin and Ethereum continue to decline, easing near-term selling pressure," Lucas said. "Off-chain, regulatory developments such as the SEC and CFTC's push for harmonized frameworks, along with ETF flow data, remain key sentiment drivers."

Kronos' Liu also noted that the FOMC meeting's impact on prices could be amplified by the U.S. initial jobless claims report released the following day.