Bitcoin (BTC) price is trading near a one-month high, following consecutive dovish updates from the US and Japanese central banks.
Bank of Japan keeps interest rates unchanged
On September 20, the price of BTC increased by about 2.5% to over $64,120, coinciding with the Bank of Japan's decision to keep interest rates unchanged after last month's rate hike.
The decision contrasts with the US Federal Reserve cutting interest rates by 50 basis points a day earlier, thus reducing the risks associated with unwinding the âyen carry tradeâ that sent Bitcoin prices down nearly 25% in August.
In other words, investors do not immediately see the risk of rising borrowing costs in Japan, meaning they can borrow Japanese yen at low interest rates and hold positions in high-yielding assets like Bitcoin.
Furthermore, the Federal Reserve's 50 basis point interest rate cut encouraged continued speculation, as yields on safe assets remained unattractive.
Overall, this fuels Bitcoin's rise as investors feel more confident in maintaining or increasing their exposure to high-yielding assets.
Bitcoin OI and Funding Rate Hit Monthly Highs
Bitcoin's price rise today was also accompanied by a sharp increase in open interest (OI) and funding rates in its futures market.
As of September 20, the total outstanding Bitcoin futures contracts were around $34.39 billion, the highest since August 26. Meanwhile, the funding rate was around 0.189% per week despite slipping into negative territory earlier in the month.
When open interest increases, more capital flows into the market, often in anticipation of significant price movements. This implies that traders are actively positioning themselves in the market, possibly anticipating continued price increases.
The move of the funding rate from negative to positive territory also shows a shift in sentiment towards a more optimistic outlook.
That means many traders expect Bitcoin's price to continue rising and are willing to pay funding costs to maintain their long positions.
Bitcoin close to breaking bull flag
Bitcoin's gains today are part of a recovery that began last week when it tested the lower resistance of the current bullish flag trend.
The price is currently targeting the flagâs upper resistance at around $65,500, with a breakout target of $78,400. As a rule, the bullish flagâs upside price target is calculated by adding the breakout point to the height of the previous uptrend. This article does not contain investment advice or recommendations. All investment and trading decisions involve risk, and readers should conduct their own research before making a decision.
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