According to 10x Research: Bitcoin has surged by 4% since yesterday, aligning with a tactical bullish outlook as it broke out of its symmetrical triangle pattern. This decisive move suggests further upside potential for the cryptocurrency. With Bitcoin's funding rate shifting back into a premium and a $1 billion increase in open interest, a straightforward strategy may be to go long on Bitcoin while shorting Ethereum. Bitcoin's dominance continues to rise, and its share of open interest consistently diverges in its favor.
1. Federal Reserve’s Dovish Stance Boosts Bitcoin
The Federal Reserve minutes were as dovish as anticipated, emphasizing the employment aspect of its dual mandate. A "vast majority" of FOMC members supported a rate cut in September, making it almost a certainty. This dovish outlook is likely to be reinforced by Fed Chair Powell in his upcoming speech, which could boost risk assets like stocks and Bitcoin as monetary policy continues to provide a favourable backdrop.
2. Employment Data and Economic Outlook
The revised employment data could confirm that risk assets are currently overvalued, hinting at a more dovish outlook as the economy begins to show signs of weakening, particularly in the labour market. While U.S. retailers like Target and Walmart have exceeded profit expectations, indicating consumer resilience, the late July stock market correction coincided with earnings reports from major tech companies, raising concerns about return on investment.
3. Nvidia’s Earnings and Market Sentiment
Nvidia’s upcoming earnings report is highly anticipated, with expectations of a 133% increase in earnings per share. A strong beat could drive stocks higher and positively influence market sentiment. Last quarter, Nvidia exceeded estimates, leading to a 40% surge in its stock and contributing to a 10% rally in the Nasdaq. While these gains didn’t immediately lift Bitcoin, the cryptocurrency may be poised to break out after a five-month consolidation period.
4. Bitcoin’s RSI and Stablecoin Inflows
The weekly Relative Strength Index (RSI) for Bitcoin shows signs of rebounding from the 50% level, a critical support zone that has historically signaled the start of significant rallies. If the RSI reverses higher from this level, it could position Bitcoin for a stronger rally in Q4. Additionally, stablecoin minting has been strong and persistent, suggesting that fiat-to-crypto conversions are positioning for higher prices ahead.
5. Upside Target and Potential Resistance
The recent rally could extend slightly, but it is likely to encounter resistance around the $65,000 level. Achieving a more substantial surge would require a significant policy shift or major news event. However, a 10% gain within a month would still represent a solid performance. While considerable risks loom in mid-September, the current focus is on the positive momentum of this Bitcoin rally. Historically, every major Bitcoin rally has begun with a tactical advance, setting the stage for potential larger moves.
In summary, Bitcoin’s recent breakout and positive momentum suggest that a rally toward $65,000 is within reach, supported by a dovish Fed stance, resilient economic data, and strong stablecoin inflows. However, traders should remain vigilant as potential risks could emerge in the coming weeks.