TL;DR
- Bitcoin has experienced a notable increase in its price, reaching a local high of $64,200 following the Federal Reserve’s interest rate cut.
- The growth of open interest in the futures markets has outpaced the increase in Bitcoin’s price.
- Inflows into Bitcoin ETFs have grown, with $397.2 million injected.
Bitcoin is shaking up the entire crypto market following the Federal Reserve’s decision to cut interest rates. Since this announcement, the price of BTC has shown a remarkable increase, reaching a new local high of $64,200, starting from the $53,000 recorded in early September.
Despite the rally, the asset remains below the critical level of $65,200, having failed to surpass previous highs since reaching its all-time record of $73,666 in March. This pattern has raised concerns about Bitcoin’s future direction, as its behavior suggests a downward trend since that time.
Despite the gains made by Bitcoin, open interest in the futures markets has grown faster than the price of the asset itself. This indicates that the increase may be primarily driven by activity in the futures and perpetual markets rather than strong demand in the spot market. In other words, although prices are rising, the market could be facing a correction or consolidation in the short term.
Regarding the altcoin market, there has also been a considerable increase in the value of several cryptocurrencies, some of which have recorded gains of more than 100% from their lows in August. However, open interest in these altcoins has also reached high levels without a corresponding increase in prices in the broader market.
The Role of ETFs in Bitcoin’s Surge
The inflows into Bitcoin ETFs are another factor to consider, with $397.2 million injected in the last period, suggesting additional growth potential for the asset, especially if traditional financial markets like the S&P 500 continue their upward trend. If Bitcoin manages to break through the key resistance levels from late August, it could experience a new rise.
On the other hand, the Fed’s decision to cut interest rates for the first time reflects a shift in its focus toward the labor market while showing signs of weakness in inflation. In this scenario, the U.S. economy has also achieved a rebound in industrial production, which may contribute to a more optimistic environment in the markets.
Additionally, the SEC has expedited the approval for BlackRock to list options for its Bitcoin trust on Nasdaq, a move that will be crucial for the integration of cryptocurrencies into the traditional financial system. At the same time, German authorities have intensified their efforts against crime, dismantling 47 exchanges allegedly used for illegal activities.
