As a seasoned analyst with over two decades of market analysis under my belt, I have witnessed numerous bull and bear markets across various asset classes. In this current scenario, I find myself optimistic about Bitcoin (BTC) despite its momentary resistance at $60,500-$61,000.
As Bitcoin (BTC) encounters temporary resistance points, it’s currently surging due to intense trading action on the spot market.
Based on data from a Bitfinex Alpha report, it appears that the current trend for bitcoin is positive, or bullish, as indicated by various on-chain metrics. This optimistic view is further strengthened by an increase in investments into U.S. Bitcoin exchange-traded funds (ETFs), which suggests growing trust from both individual and institutional investors.
Spot Activity Drives Bullish Momentum
From my perspective as an analyst, I’ve noticed that Bitcoin’s recent bullish trend is reflected in the Spot Cumulative Volume Delta (CVD) figures. This metric computes the net volume from spot market orders across various exchanges by subtracting sell order volume from buy order volume. Since the dip below $53,000 in early September, Bitcoin’s spot CVD has been pushing its price upwards.
Analysts note that the prices for stablecoin-backed and crypto-collateralized perpetual markets have risen, but these increases have been small. This suggests that Bitcoin’s continued price surge is more likely due to direct trading on spot markets rather than activity in perpetuals or futures markets.
According to Bitfinex, this type of purchasing pattern is generally considered a stronger basis for price rises because it signifies a direct investment of funds into the asset, rather than increases resulting from speculative gambles that rely on borrowed capital.
BTC at Resistance Level
The recent increase in prices has pushed Bitcoin up to the $60,500 – $61,000 barrier that analysts find troubling. This significant level has been instrumental in shaping the fluctuating price trends since early March in the market.
Another cause for concern is how the spot CVD has remained flat while driving bitcoin’s price; Bitfinex said this metric could stall if there is a de-risking event before or after the highly-anticipated Federal Open Market Committee (FOMC) meeting this week.
Historically, it’s been observed that equities and risky assets tend to experience a drop following the Federal Reserve’s announcement of a rate reduction on shorter time scales. Yet, Bitfinex cautions that this trend isn’t always reliable when forecasting future market movements.
As an analyst, I’m observing that the cryptocurrency market is primed for possible volatility, given investor anticipations about upcoming interest rate reductions by the Federal Reserve. Regardless if they decide on a 25 or 50 basis point cut, Bitfinex suggests that market dynamics might oscillate between prudent risk-reduction and aggressive bullish trends.
Over the past few days, I’ve noticed a significant increase in the total Bitcoin Open Interest across all perpetual trading pairs – approximately 14%. This surge comes after Bitcoin dipped below $53,000. Interestingly, the funding rates have also shifted from an extremely negative stance to a neutral one. In simpler terms, it seems that market participants are showing increased confidence and optimism in the Bitcoin market, as indicated by these changes.
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2024-09-17 23:32