This weekend, a fervent discussion erupted within the crypto community, centering on the Bitcoin price rally triggered by Federal Reserve Chairman Jerome Powell’s latest speech. The rally has propelled Bitcoin back into its $61,000 to $70,000 consolidation range, prompting analysts at trading firm QCP Capital to weigh in on the market movements.
In a recent report, QCP Capital attributed the Bitcoin price surge to the Fed’s announcement of a potential cycle of lower interest rates. On-chain data indicates that this rally was primarily driven by spot Bitcoin demand rather than futures or other derivatives. Despite the surge, funding rates, which signify the cost of maintaining long positions in the futures market, remained constant. QCP pointed out that if Bitcoin holds support at $62,000, an increase in leveraged long positions is anticipated as summer comes to an end.
Additionally, the QCP report highlighted a significant uptick in bullish calls in the options market, especially around the $62,500 to $63,000 strike prices, just before Powell’s discourse at Jackson Hole. The firm also noted that bullish sentiment is strong even for the long-term, with investors piling into long bets for December and March, eyeing strikes between $80,000 and $85,000.
Powell has confirmed that the Federal Reserve will reduce interest rates in the coming month. QCP analysts suggest that a 25 basis-point cut could be bullish for Bitcoin, as it indicates the Fed is cautiously managing the economy. Conversely, a 50bp cut might show more aggressive measures to stave off economic downturns.
While selling pressure has decreased and steady capital has flowed into spot exchange-traded funds (ETFs) over the past two weeks, QCP analysts predict that Bitcoin will continue to consolidate within the $61,000 to $70,000 range until the fourth quarter of 2024. They posit that the US elections coupled with bullish seasonality could serve as a catalyst for new all-time highs.
Presently, Bitcoin is valued at approximately $64,250, reflecting a modest 0.5% increase over the past 24 hours. Data from CoinGecko shows that the leading cryptocurrency has appreciated by over 8% in the past week. As Bitcoin continues to hover around the $64,000 mark, market watchers are keeping a close eye on the unfolding trends.
