Bitcoin prices have risen in response to the market reacting to the Federal Reserve's dovish signals and the increasing accumulation of BTC by long-term holders.
Bitcoin's price of $86,293 has risen 4% in the past 24 hours, reaching over $86,000 on March 20. At the intraday high, the cryptocurrency traded at $87,470, indicating that traders are taking moderate profit.
The main catalysts driving up Bitcoin prices include:
Following the Federal Reserve's dovish signals, risk assets surged.
The supply of BTC in long-term holder addresses is increasing.
Bitcoin rises after the Federal Reserve calms trade war bear market
The Federal Reserve hinted that it still expects to cut interest rates twice later this year, alleviating investors' concerns about long-term monetary tightening, leading to a rise in Bitcoin.
Highlights from the Federal Open Market Committee meeting on March 19:
The Federal Reserve kept the benchmark interest rate unchanged while acknowledging that tariff-driven inflation pressures may be 'temporary.'
Federal Reserve Chairman Jerome Powell's cautious tone on recession risks, stating the risks are 'not high', reassures risk-taking investors.
The Federal Reserve lowered its economic growth forecasts, stimulating a rise in the bond market and enhancing expectations of future declines in borrowing costs.
Daily chart of U.S. 2-year and 10-year Treasury yields. Source: TradingView
Lower interest rates make risk assets like Bitcoin more attractive as they reduce the opportunity cost of holding non-yielding investments.
U.S. President Trump has once again pressured the Federal Reserve to cut interest rates, increasing speculation about further easing of monetary policy, which would be beneficial for Bitcoin.
Long-term Bitcoin holders transitioning to accumulation
The sustained rise in Bitcoin prices aligns with signs of accumulation from its long-term holders: entities holding BTC for over 155 days.
Key points:
The spending pressure from long-term holders (LTH) is easing, as indicated by the slowing binary spending metric and the increasing supply of LTH.
The willingness to hold rather than sell is stronger, indicating a shift in the seller distribution pattern.
When Bitcoin fell to a four-month low, LTH distribution saw a brief but sharp spike (the red bars in the chart below) due to some investors taking profits.
Bull markets usually see LTH selling pressure balanced with new demand, and this cycle absorbed a similar amount of LTH profits as previous cycles.
Glassnode analysts wrote in their latest weekly report: 'This may suggest that long-term holders have reached a certain level of saturation and have completed most of their selling activity within the current price range.'
Bitcoin rebounds from a technical support level
Today's rise in Bitcoin prices occurred after testing the lower trend line of the current ascending channel pattern.
Notes:
Since March 9, Bitcoin has been rising within an ascending channel.
Since then, the cryptocurrency has tested the lower boundary of the channel three times, with the most recent test on March 18.
The first two scenarios led to rebounds of 7.50% and 6.60%, while the current scenario resulted in a rise of 7.60%.
As of March 20, BTC/USD faces strong resistance near the upper boundary of the channel, consistent with the 200-4H EMA (blue wave) around $87,830.
A decisive pullback could lead the currency pair to initially drop towards the 50-4H EMA around $83,900.
Further corrections may test the support level at the channel's lower boundary, consistent with the $82,400 level that served as support between March 16 and March 17.