September 20
After the Federal Reserve slashed interest rates by 0.5%, market expectations for future financial policy easing prompted risk assets such as Bitcoin and stocks to rise simultaneously. Bitcoin topped $63,000 at the open on Wall Street, hitting a three-week high, showing a similar rally to the stock market, especially strong performances from the S&P 500 and Nasdaq.
The current market optimism stems from several key factors:
Impact of the Federal Reserve's interest rate cuts: The interest rate cuts provide a looser liquidity environment for the economy, and investors have turned to risky assets such as stocks and Bitcoin. Investor confidence has grown amid market expectations of further interest rate cuts in the future.
Correlation between S&P 500 and BTC: The S&P 500 has added $3 trillion in market capitalization since the beginning of September, indicating that investors are actively piling into the stock market. This momentum has also driven Bitcoin higher, suggesting the two are correlated in the current market environment.
Institutional short-selling has declined: Data show that institutional investorsâ short-selling activity on Bitcoin has decreased significantly, reflecting the marketâs positive view of Bitcoinâs prospects. Especially in the CME futures market, net short positions decreased by 75%.
Although Bitcoin is currently performing well, there may be a brief period of consolidation, after which Bitcoin is expected to rise further. Therefore, this period may be an opportunity to buy on dips.
From a personal perspective, Bitcoin's rise not only benefits from the Federal Reserve's easing policies and the strong performance of the stock market, but is also closely related to changes in market sentiment and the reduction of short selling by institutional investors. Although consolidation is possible in the short term, if Bitcoin can successfully break through the $65,000 resistance level, subsequent upside potential is still expected. Investors can consider buying dips during the consolidation while keeping an eye on the Fed's policy changes and their continued impact on the market.
