This has been a truly shocking week in many ways, as Federal Reserve Chairman Jerome Powell finally delivered on what some in the market had been hoping for by cutting interest rates by 50 basis points.
The S&P 500 is hitting an all-time high again and gold remains in upside-only mode.
Depending on policy changes and other factors, Bitcoin BTCUSD It surged higher and showed strength to $64,133. Despite the confirmation of the long-awaited Fed policy shift, Bitcoin’s daily price movement has yet to deviate from the six-month norm.
As mentioned last week, Bitcoin charts are showing a structurally orderly downtrend. On longer timeframes, price is making lower weekly highs, with futures-led liquidations driving price movement. Even the move to the range high from September 18th to September 20th is within the boundaries of the current six-month range.
At the time of writing, it is observed that BTC price is recovering from the resistance of the previous (August 24th) breakout high of $65,000, which is also in line with the 200-day moving average. If the weekly candle closes below this level, the weekly low pattern will still continue.
A natural outcome of a breakout like the one seen this week is for the price to retest the fundamental support near the 20-day moving average ($60,000 to $58,500 range), especially if traders fail to maintain spot volume to follow the current breakout. Over the past six months, spot volume has remained relatively flat, while the majority of Bitcoin price movement has been driven by futures settlement and options market activity.
On the flip side, Bitcoin's open interest has been increasing after this week's FOMC, and if traders continue to attack the $64,000 to $66,000 zone, it could break out of the descending channel and change Bitcoin's higher timeframe market structure.
As shown in the chart above, the price has not been able to break out of the descending trend line of the channel since April 24, and bulls would need to secure a close above $66,300 to make this happen.
Related: Why Bitcoin Liquidations Alone Cannot Push It Past $70,000 High
JJ, head of crypto options and derivatives at HighStrike, suggested that if Bitcoin prices rise above the 200-day moving average ($64,000), it could trigger “massive short liquidity and short call gamma,” but the analyst said Coinbase's “sellers will likely take down their walls first.”
Traders also noted the Fed’s rate cut roughly coincided with the start of the fourth quarter and the synchronicity of the news on Sept. 20 that the U.S. Securities and Exchange Commission approved options on BlackRock’s Spot Bitcoin ETF.
BTC ETF options listing is a bigger milestone than you might think
Derivatives are the foundation of functioning markets, and BTC and digital assets still have a way to go to catch up with traditional markets. Enter the world's largest capital market: https://t.co/tpuVPVmJCA
Charles Edwards, founder of Capriole Investments, said:
“Q3 is the worst time for Bitcoin. Q4 is the best.”
This article does not contain any investment advice or recommendations. Any investment or trading involves risks and readers should conduct their own research when making any decision.
