(Kitco News) – Bitcoin (BTC) bulls charged higher in early trading on Friday after dovish comments from Federal Reserve Chair Jerome Powell at the Jackson Hole Symposium in Wyoming boosted market sentiment, sending asset prices from stocks to cryptos and precious metals soaring.
Data provided by TradingView shows that BTC had been chopping its way higher since hitting a low near $60,100 midday on Thursday. It climbed above $61,000 in the early hours of Friday, where it paused to consolidate ahead of Powell’s speech.
BTC/USD 4-hour chart by TradingView
“The time has come for policy to adjust” was Powell's only comment that the market needed to hear. That initiated a price surge across asset classes, with the major indices all up more than 1% at the time of writing. Spot gold climbed back above $2,515, up 1.24% on the session.
Bitcoin responded with a 2% spike, hitting a high of $62,347, before the ‘sell the news’ crowd took profits, resulting in a pullback to $61,404, where it currently trades.
In the lead-up to Powell’s Jackson Hole speech, Bitcoin largely traded sideways, albeit with notable volatility, but analysts expect it to resume its uptrend now that interest rate cuts are on the table.
“We had another largely sideways-ranging week, but this week saw Bitcoin break past the critical $60,000 mark again, and it's holding firm above this level as of the time of writing,” said Rachel Lin, co-founder and CEO of SynFutures. “Following last week's sharp rejection from this area, Bitcoin established a higher low at $56,000, and since then, it's been steadily climbing back, reclaiming the $60,000 mark.”
“While these sideways weeks like this might feel uneventful for crypto traders, they are crucial for Bitcoin's long-term health,” she noted. “The last several months have allowed Bitcoin to build a solid support base around the $60,000-$70,000 range.”
“A look at Bitcoin's monthly chart reveals that the asset has been consolidating near its 2021 high for over six months,” Lin observed. “If Bitcoin breaks out of this range now, it would likely have a much stronger upward momentum than it would have had if the breakout happened earlier this year.”
BTC/USD 1-month chart by TradingView
“On the derivatives front, market sentiment remains bullish,” Lin said. “For Bitcoin, the highest open interest is on the $100,000 Dec expiry call option. Ethereum's derivatives market is similarly optimistic, with the highest OI on the $4,000 Sept expiry call option, followed by a $6,000 Dec call. Notably, the top 10 OIs for Bitcoin and Ethereum are all call options, with no significant put options.”
She also noted that following the flash crash that came amid the Japanese yen carry trade unwind, “equities markets have resumed their bull run.”
“Both the NASDAQ and S&P 500 have erased most of their earlier losses. The NASDAQ is now just 4% away from its all-time high, while the S&P 500 is less than 1% off its record peak,” Lin said. “The equity market's strong rebound can be attributed to fading fears about a potential conflict in the Middle East and the release of the recent Federal Reserve meeting minutes, which suggest growing support for an interest rate cut in September.”
“Overall, an excellent week for the equities market and an average one for crypto,” she concluded. “While crypto's underperformance is a cause for concern, it remains a solid bullish trend.”
According to CryptoQuant founder and CEO Ki Young Ju, historical data shows that the second phase of Bitcoin’s post-halving bull run typically starts in Q4, which he expects to be the same this time around, saying, “Whales won't let Q4 be boring with a flat YoY performance.”
In the last #Bitcoin halving cycle, the bull rally began in Q4. Whales won't let Q4 be boring with a flat YoY performance. pic.twitter.com/LIWH53OpkD
— Ki Young Ju (@ki_young_ju) August 21, 2024
