Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin (BTC) has reached a three-week high, with the price approaching $63,500 on the Bitstamp exchange. This has created an atmosphere of excitement in the market, especially after the US Federal Reserve (Fed) announced a drastic interest rate cut of up to 0.5% the day before.
Optimism about long-term US fiscal policy has pushed risk assets higher. Stock indices such as the S&P 500 and gold prices have both risen, with the S&P 500 nearing a record high. Meanwhile, BTC/USD is also approaching a key resistance level – the peak price since March.
Trading firm QCP Capital pointed out that the yield spread between 2-year and 10-year US Treasury bonds, a recession predictor, began to narrow in July 2022. Currently, this spread has increased to +8 basis points, indicating market optimism and a shift to risk assets such as Bitcoin.
The Fed is expected to continue cutting interest rates, with at least two more cuts expected before the end of the year. The US stock market is also reflecting this optimism, with the S&P 500 and Nasdaq up more than 20% since the start of the year.
Bitcoin traders are unsurprisingly optimistic about the market's strong recovery. A popular social media trader, Byzantine General, described the Bitcoin spot market as "robust." Meanwhile, Michaël van de Poppe, a cryptocurrency analyst and entrepreneur, said that BTC/USD is "doing well."
Bitcoin is benefiting from the Fed's rate cut policy
Van de Poppe shared that he expects Bitcoin to correct before continuing to rally. However, he also emphasized that since recent statements by Fed Chairman Jerome Powell, the market has been growing steadily and there are many opportunities to buy on dips.
How high will Bitcoin go?
Data from CoinGlass shows that Bitcoin’s key resistance is increasingly concentrated at $64,000 – a popular target price after the Fed announced its interest rate cuts. This will be a milestone that many traders are aiming for.
Amid mixed flows of Bitcoin exchange-traded funds (ETFs) in the US over the past week, new data reveals that financial institutions have changed their strategy towards Bitcoin. According to Ki Young Ju, founder of analytics platform CryptoQuant, financial institutions are no longer “aggressively shorting Bitcoin” as before.
Data from CME Group’s Bitcoin futures contracts show that institutional short selling has slowed significantly. However, US spot ETF inflows still recorded net outflows on September 18, in contrast to the positive $187 million the day before, according to Farside Investors, a UK-based investment firm.
