Bitcoin has seen a significant surge above $65,000 as markets were positively impacted by improving US economic data and institutional capital inflows. The surge was mainly attributed to a decline in US unemployment claims and expectations of another interest rate cut by the Federal Reserve.
Technically, Bitcoin BTC price closed above the pivotal resistance level of $64,500, which is a sign of further rise, awaiting confirmation after the release of inflation data today, Friday.
Data showed a decline in weekly unemployment claims issued by the US Bureau of Labor Statistics, which showed a decrease of 4,000 claims to reach a total of 218,000, indicating the continued strength of the US labor market.
Additionally, the GDP growth rate for the second quarter of 2024 was revised to 3.0%, reinforcing expectations that the Federal Reserve may move towards further interest rate cuts in the coming period.
This expected decline in interest rates may push more investors into digital assets like Bitcoin, where a weaker US dollar is a catalyst for its price to rise.
Positive impact of China's stimulus package
Along with the US data, China's recently announced economic stimulus package has also helped boost Bitcoin and other cryptocurrencies.
China has injected massive liquidity into markets by cutting banks' reserve requirements and lowering mortgage rates, stimulating global markets and increasing investors' risk appetite.
The package was worth about $140 billion, as the People’s Bank of China cut banks’ reserve requirement ratios by 50 basis points, allowing banks to provide more loans and pump more money into the economy, especially in the struggling real estate sector.
In addition, the Chinese government has provided convenience to investors by lowering mortgage rates and encouraging stock buybacks.
This stimulus coincided with lower interest rates in the United States, creating a stimulating environment for digital assets like Bitcoin.
Historically, increased global liquidity drives up the prices of riskier assets. That appears to be what happened with Bitcoin, which has seen a 10% jump since the first announcement of the US rate cut on September 18.
Increased institutional demand and inflation data awaited
This surge has also boosted capital inflows into Bitcoin ETFs. These funds have seen massive inflows of over $365 million in just one day. These inflows are a strong indicator of growing institutional demand for the currency, which helps reduce the risks associated with it.
Although some investors were skeptical about the strength of institutional demand, these large inflows indicate a significant shift in the market’s direction.
On Friday, financial markets are awaiting the release of the Personal Expenditures Index (PCE) figures on September 27. Analysts are expecting a decline in the inflation rate. This could lead to further interest rate cuts.
If that happens, it could push Bitcoin even higher, making the digital asset a more attractive option for investors looking to make profits amid falling interest rates.
Bitcoin BTC Technical Analysis: Breaks $64,500 Pivotal Resistance
The daily candle of Bitcoin price closed above the very strong pivotal resistance level of $64,500. As shown in the attached daily chart.
This barrier, which stopped the price from rising in the past few days, is formed by the upper limit of the descending price channel in which the BTC price has been moving since it reached its all-time high in mid-March, about 6 months ago.
In addition, there is the 200-day moving average, and the previous high at $64,500.
We mentioned earlier that breaking it is a prerequisite for the price to reach the $71,000 level. Because its rise will push the BTC price down, and thus the breakout will be false.
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