Bitcoin surged above $114,000 for the first time since Aug. 24, extending its recent recovery as U.S. inflation data came in cooler than expected, boosting investor confidence in an imminent Federal Reserve rate cut.
During the mid-New York session, BTC broke a key midterm resistance level at $113,500 after three failed attempts over the past two weeks. The rally was fueled by the release of the August Producer Price Index (PPI), which dropped to 2.6% year-over-year, well below the 3.3% forecast. Meanwhile, Core PPI, which excludes food and energy, slid to 2.8%, lower than the 3.5% consensus.
Data from Kalshi shows an 80% probability of a 25 bps rate cut next week, with an 18% chance of a larger cut. Traders now project three rate cuts with a 44% probability, overtaking the odds of two cuts at 39% — the first time this has happened since April.
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Historically, Fed easing tends to bring initial turbulence, followed by strong upside for Bitcoin as liquidity flows into risk assets. If this pattern repeats, BTC could be on track for new all-time highslater in 2025.
Crypto analyst Rekt Capital highlighted the breakout on X, noting that BTC had not only broken its local downtrend but was also challenging a critical resistance zone at $113,000. “Each rejection from $113k has yielded shallower and shallower pullbacks,” he said, suggesting strengthening bullish momentum.
Upside Targets and Key Support Levels
On the daily chart, Bitcoin has broken out of its rising channel but is now struggling to reclaim higher levels. The asset is hovering around $114K, just below the 100-day moving average, which is acting as resistance. The RSI sits around 50, reflecting a neutral momentum state, neither oversold nor overbought.
Several analysts have noted that if bulls can close above the moving average, Bitcoin could make a quick move toward the $118K–$120K zone, with the $124K all-time high as the next major target.
However, repeated failures to hold above $114K may trigger a pullback, with the $104K fair value gapacting as the first major demand area. The 200-day moving average (MA) near $101K would serve as the last line of defense before a deeper correction unfolds.
Onchain analysis notes Exchange reserves continue to decline sharply, falling to multi-year lows. This persistent outflow, which is quite odd for BTC being at all-time highs, indicates that investors are moving coins into long-term storage, reducing the liquid supply available for trading. Such a supply contraction often supports price stability and sets the stage for bullish moves when demand increases.
Broader Crypto Market Recorded Gains, Gold Rally Adds to Risk-On Sentiment
The broader crypto market also saw gains Wednesday as inflation data stoked bullish sentiment. At the same time, gold prices surged to a record high above $3,670 per ounce, signaling a rush into alternative assets.
Future Outlook
Bitcoin’s path forward now hinges on whether bulls can sustain momentum above $114K. A decisive close above this level could quickly propel BTC toward $118K–$120K. Failure to hold may see BTC retesting $110K support, with risks of a drop toward $104K if selling pressure accelerates.
With the Federal Reserve’s decision looming, Bitcoin traders are bracing for heightened volatility and possibly the fuel needed to push BTC toward uncharted territory.