(Kitco News) – Volatility returned to financial markets on Wednesday as traders appeared unsure of what to expect next from the Fed and the economy amid rising recession fears and the expected increase in M2 money supply and global liquidity that will come with reduced interest rates.
“Liquidity continues to expand, pushing asset prices higher, a trend traceable to the rising US M2 money supply and the swelling balance sheets of the top 15 central banks,” noted analysts at Secure Digital Markets. “China's push for aggressive monetary easing, combined with the U.S. Fed’s 50bps rate cut, has further catalyzed market momentum.”
“With most central banks pivoting towards rate cuts, macroeconomic conditions are becoming increasingly important,” they added. “Investors should closely monitor upcoming economic reports and earnings season to gauge potential market direction.”
“Equity futures were largely flat on Wednesday, as Wall Street seeks to build on its gains from September,” the analysts said. “Despite positive momentum, concerns about an economic slowdown linger, particularly after the Fed’s recent rate cut. The futures market now places a 60% probability on another 50bps rate cut by November, a dramatic rise from just 13% last month.”
After opening the day higher, the S&P trended into the red as midday approached and never climbed out, while the Nasdaq gave back its early gains and battled to stay in the green. The Dow was in the red for the entire trading day, and at the close of markets, finished down 0.70%, while the S&P recorded a loss of 0.19%, and the Nasdaq finished flat.
“After BTC surged to $64K in yesterday’s afternoon trading session, the market quickly lost confidence, resulting in a pullback of over 2% this morning,” noted Secure Digital Markets analysts. “Notably, funding rates turned negative before returning to positive, underscoring the market's indecision. Traders are now laser-focused on the $65K level, which needs to hold for a confirmed breakout and a renewed bullish outlook.”
Data provided by TradingView shows that an early morning attempt to push Bitcoin (BTC) above $65,000 was halted at $64,800, leading to a retest of support at $63,000.
BTC/USD Chart by TradingView
“On the ETF front, Bitcoin inflows hit $136 million this week, driven largely by Blackrock, which recorded its largest inflow in over two weeks at $98.9 million,” Secure Digital Markets analyst said. “Ethereum (ETH) followed suit with a strong $62.5 million inflow, marking one of its largest increases recently. Trading volume for BTC ETFs rose 18%, while ETH ETF volume grew by 8%.”
“Looking ahead, Deribit reports that $7.7 billion in BTC and ETH option contracts are set to expire this Friday, which could trigger notable volatility in the crypto markets,” they warned.
At the time of writing, BTC trades at $63,401, a decrease of 1.2% on the 24-hour chart.
While stocks and cryptos struggled to maintain their recent momentum, spot gold rallied to another record high above $2,670/oz late on Tuesday, and has since pulled back to $2,659/oz, for a gain of 0.10% on the session.
Crypto community grows bullish
A survey of Crypto X shows that most of the community is now in bull market mode, with expectations that Bitcoin will rally towards $100,000 in the final quarter of 2024.
“The second phase of the crypto bull market is on the horizon,” tweeted market analyst Wolf.
“$BTC has been consolidating for six months, and rather than signaling a reversal, it's forming a clear consolidation pattern,” he added. “My analysis points to a cycle top expected around Q4 2025.”
Market analyst Wick highlighted the reversal bar that appeared for weeks ago and said a continued break to the upside will validate the bullish outlook.
$BTC (Weekly)
When this Reversal bar has just printed I mentioned that it could be the technical catalyst to get us to the upper range of the megaphone.
We're almost there. Then we need to resolve and delineate the pattern with a break to the upside! pic.twitter.com/vZPSzadEQi— Wick (@ZeroHedge_) September 25, 2024
Analyst Luke Broyles noted that, when adjusted for inflation, Bitcoin’s 2021 all-time high is $83,000, and said that “By the time we have the next round of printing in the next 6-18 months, it will be $95,000.”
“$100,000 nominal #BTC price in 2025 is (quite possibly) barely getting us to 2021 levels,” he said. “If you don’t believe me, look at #Bitcoin in Canadian or Australian political currency. Nominal vs real is pretty crazy to think about. $100k in 2025 is $69k in 2021…”
Crypto trader Elija Boom suggested that the parabolic phase has started and noted the replacement names the crypto community has for the next four months during bull market cycles, starting with Uptober.
$BTC parabolic phase has started ?
Uptober
Moonvember
Pumpcember
Bulluary
All are coming ?#Bitcoin pic.twitter.com/Xc1nj1d4En— Elja (@Eljaboom) September 25, 2024
“$BTC consolidation days are numbered,” he said in a follow-up post. “Soon, BTC will break out of this range and pump towards a new ATH!”
And playing devil’s advocate to the bullish bent was market analyst Follis, who posted the following chart highlighting that BTC is at a stubborn resistance level and could soon trend back down toward the bottom of the range it has been in since March.
Damn wouldn't it be crazy if the entire timeline got bullish at resistance yet again$BTC pic.twitter.com/Rx0e8ubGDY
— フ ォ リ ス (@follis_) September 25, 2024
Altcoin uptrend continues
Altcoins continued to show strength as the majority of tokens in the top 200 recorded gains for the third day in a row.
Daily cryptocurrency market performance. Source: Coin360
Celo (CELO) was the top gainer, climbing 23.5%, followed by an increase of 22.1% for Worldcoin (WLD) and a gain of 19.5% for Baby Doge Coin (BabyDoge). ZetaChain (ZETA) was the biggest loser, falling 6%, while Conflux (CFX) lost 5.7%, and Catizen (CATI) declined by 4.8%.
The overall cryptocurrency market cap now stands at $2.22 trillion, and Bitcoin’s dominance rate is 56.2%.
