Bitcoin Enters Market Cooling Phase as Federal Reserve Rate Cut Expected

Based on my analysis, CryptoQuant reports that Bitcoin has entered a cooling-off phase after reaching an all-time high of $123,000 last month. The bullish sentiment indicator has dropped from 80 to 60, which suggests that while the overall environment remains optimistic, the momentum behind the rally is waning. This decline in the bullish index reflects both profit-taking after the historic peak and seasonal slowdown during summer trading. The market's strength, evaluated through various on-chain metrics, remains close to bullish, but the decreasing momentum indicates the potential for short-term consolidation or mild correction. If Bitcoin's price weakens further and the index drops below 40 — a threshold not crossed since April 2023 — it would signal a transition into a bearish market, confirming the end of the current bull cycle. However, the upcoming Federal Reserve meeting in September and its potential to cut interest rates could serve as a market catalyst. Such a move would likely boost risk asset demand, including Bitcoin, potentially reversing the current cooling trend and reigniting bullish momentum. In summary, while the current signs point to a market pause or minor dip, the overall outlook remains cautiously optimistic. Investors should monitor macroeconomic developments closely, especially the Fed's policy decisions, as these could significantly impact Bitcoin’s trajectory in the coming weeks.