Every asset class will be impacted by the Federal Reserve embarking on a rate-cutting cycle. That includes cryptocurrency, and especially Bitcoin , still the largest and most widely followed by a long shot. Even for investors who don’t trade or care about it, Bitcoin matters. Why? It has become a critical risky asset because of its strong positive correlation with the S & P 500 over the last several years. While they don’t always move in lockstep, it is rare for the two to diverge for long. At times, bitcoin leads; other times, the S & P 500 does. In 2025, BTC topped in January, while the S & P hovered near its highs for several weeks. Bitcoin’s decline proved to be a leading indicator, as the SPX followed lower. Both assets bottomed in April. More recently, BTC has slipped from its August peak, while the S & P briefly topped at the same time but has since moved higher. The best-case scenario is that the S & P, leading this time, pulls bitcoin higher—allowing it to eventually surpass its last high. For that to happen soon, Bitcoin must complete a potential inverse head and shoulders pattern, which has been forming over the last four weeks. This structure began with Bitcoin holding its late-August low, rallying, and then pausing—creating a possible right shoulder. The entire pattern has developed just under the $117,000 level. A traditional measured move from this setup targets around $127,600, which would put BTC above its early August high. If realized, this would likely coincide with the S & P 500 advancing as well. If momentum carries further from that point, the even higher $142,000 breakout target could come back into focus. While BTC has not yet achieved that level and has backed and filled in recent weeks, it has respected the breakout zone — undercutting it twice but bouncing back each time. A similar breakout occurred in November of last year, which sparked a strong advance. Now, as we move through the second half of September, investors know that bitcoin has historically shown seasonal strength in Q4. This backdrop could help the technical conditions mature and allow these two patterns to resolve to the upside. Another angle to consider is the downsloping trading channel that has defined the last few months. Such channels are often bullish within a long-term uptrend, which bitcoin has been in since bottoming in late 2022. Along the way, bitcoin has broken out from five prior downward-sloping ranges similar to this one—a positive technical sign. The challenge is that the last two breakouts did not generate strong follow-through in momentum. The 14-week RSI topped just below 70 twice this year (yellow), compared with much stronger readings in late 2023 and early 2024, when RSI surged into the 80s twice and the high 70s once (green). For momentum to truly return, a similar RSI surge will need to appear on the weekly timeframe. If that occurs, a much larger advance could unfold. This zoomed out weekly chart shows that the two prior bullish breakouts had extreme follow-through—Bitcoin advanced over 130% in late 2023 and another 50% in 2024 AFTER breaking out. As the saying goes, while history doesn’t always repeat, it often rhymes. Bitcoin has consistently played a major role in shaping global risk appetite, and its direction will be critical for equities in the U.S. and worldwide. — Frank Cappelleri Founder: CappThesis DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
