Matrixport Research: Bitcoin's price action is shifting gears as trends come under pressure and rhythm dominates.

The latest FOMC meeting saw an expected rate cut, but the forward guidance failed to clarify the future policy direction, instead signaling a policy "pause." Despite recent frequent talk of the Fed restarting its balance sheet expansion, the impact of this uncertainty on current prices remains limited, judging from interest rate pricing and asset performance. Powell's cautious remarks at the press conference, coupled with early signs of a weakening labor market, indicate a significant shift in the current macroeconomic environment compared to the beginning of the year. Against this backdrop, Bitcoin broke below a key long-term trend indicator for the first time in this bull market, signaling a change in the market structure. The market is gradually shifting from a single-trend market to a more complex phase that relies heavily on timing and risk management.

Policy pause confirmed: Macroeconomic conditions weaken at the margin, liquidity expectations cool further.

Despite the Federal Reserve's rate cut, the post-meeting statement was generally hawkish, projecting only one rate hike in 2026, with the next postponed to 2027. This arrangement signals a clear "policy pause," highly similar to the situations in 2019 and 2024—Bitcoin typically strengthens before meetings and gradually weakens after the rate cuts are implemented.

The market has recently been frequently mentioning the "Federal Reserve restarting its balance sheet expansion," but it's important to note that the monthly $40 billion in Treasury bill purchases, a "technical" measure, does not constitute quantitative easing. Its core function is to offset the liquidity withdrawal resulting from quantitative tightening and the tightening of funds caused by factors such as the increase in the Treasury's general account and the decrease in reverse repurchase balances, rather than providing trend support for risky assets. Against the backdrop of continuously declining expectations for interest rate cuts, a continued cooling of the real estate market, and rising unemployment, the momentum for positive macroeconomic factors is weakening.

Technical signals and political cycles resonate: The pace of the bull market faces a test.

For Bitcoin, this macroeconomic turning point coincides with a key technical signal. For the first time since the start of the fifth bull market, the price has fallen below its 12-month moving average. In the past three cycles, this signal has corresponded to the end of a bull market phase, and it has mostly occurred within a window of about a year before the US midterm elections.

Looking at a longer timeframe, it's more likely that Bitcoin's four-year cycle is attributed to the political cycle rather than the halving event itself. Historical experience shows that the months leading up to midterm elections are often a period of relative pressure and increased volatility for Bitcoin. Currently, US stocks are still near historical highs, and the 10-year Treasury yield is stable at around 4%, constraining both fiscal and policy space, making genuine policy support still a distant prospect.

Overall, Bitcoin's short-term rebound does not signify the start of a new bull market. A weak macroeconomy, tight liquidity, rising unemployment risks, coupled with the politically sensitive period leading up to the midterm elections, make this phase more prone to high volatility and repeated fluctuations. In the current environment, rather than simply betting on trends, the market requires more flexible responses and position management. A bull market will eventually arrive, but until then, opportunities are more likely to arise from grasping the rhythm of each phase, rather than assuming the market will quickly revert to its original bullish trajectory.

The above viewpoints are from Matrix on Target. Contact us to obtain the full Matrix on Target report.

Disclaimer: Investing in the market involves risks; please exercise caution. This article does not constitute investment advice. Digital asset trading can be extremely risky and volatile. Investment decisions should be made after careful consideration of your individual circumstances and consultation with a financial professional. Matrixport is not responsible for any investment decisions made based on the information provided in this content.