This week was a real belt-buster on so many levels. Federal Reserve Chair Jerome Powell finally gave a portion of the market what it wanted by tossing out a 50 basis point interest rate cut.
The S&P 500 hit another all-time high and gold remains in up-only mode.
In response to the policy shift and other factors, Bitcoin (BTC) broke out and found strength up to $64,133. Even with the long-awaited Fed policy shift confirmed, Bitcoin’s day-to-day price action has yet to deviate from its six-month norm.
As mentioned in previous weeks, the Bitcoin chart shows a structurally ordered downtrend. On the higher timeframe, price is making weekly lower highs, and futures-driven liquidations drive the price action. Even the Sept. 18 to Sept. 20 move to the range highs is within the boundaries of the current six-month range.
BTC/USDT weekly chart. Source: TradingView
At the time of writing, BTC price can be observed peeling back from resistance at the previous (Aug. 24) breakout high at $65,000 which also lines up with the 200-day moving average. If the weekly candle closes below this level, then the pattern of weekly higher lows is still in play.
A natural outcome of a breakout like the one seen this week would be for price to retest underlying support near the 20-day moving average ($60,000 to $58,500 range), especially if traders fail to follow through on the current breakout with sustained spot volumes. During the last 6-months, spot volumes have been relatively flat, while a majority of Bitcoin’s price action has been driven by futures liquidations and options market activity.
1 week view of Bitcoin futures liquidations and aggregate spot volumes. Source: Coinalyze
On the flipside, following this week’s FOMC, there has been an uptick in Bitcoin’s open interest and if traders persist in attacking the $64,000 to $66,000 zone there is a chance of braking throug the descending channel and altering Bitcoin’s higher timeframe market structure.
BTC/USDT daily chart. Source: TradingView
As shown in the chart above, BTC price has been unable to push through the channel’s descending trendline since April 24 and bulls would need to secure a close above $66,300 to make this a reality.
Related: Bitcoin liquidations won’t be enough to break $70K+ range high — Here’s why
HighStrike head of crypto options and derivatives JJ hinted that a Bitcoin price move above the 200-DMA ($64,000) would potentially ignite “big blocks of short liquidity and short call gamma,” but according to the analyst, first the Coinbase “seller would kindly remove his wall…”
Bitcoin GVOL GEX. Source: JJ the Janitor
BTC/USDT 1-day chart at Coinbase. Source: JJ the Janitor
Traders have also been alluding to the synchronicity of the Fed rate cut nearly aligning with the start of Q4 and the Sept. 20 news of the United States Securities and Exchange Commission approving options on BlackRock’s spot Bitcoin ETF.
listing options on btc etfs is a more important milestone than you think
derivatives are the foundation of functional markets, and btc and digital assets have a ways to go to catch up to traditional markets. enter the largest capital market in the world: https://t.co/tpuVPVmJCA
— Kelly Greer (@kellyjgreer) August 15, 2024
According to Capriole Investments founder Charles Edwards:
“Q3 is the worst time to be in Bitcoin. Q4 is the best.”
Bitcoin quarterly returns. Source: Capriole Investments
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
