Bitcoin On-Chain and Derivatives Data Shine Optimism Amid Fed Chair Remarks

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As a seasoned crypto investor with a decade of experience under my belt, I find myself optimistic about the prospects of Bitcoin and other cryptocurrencies as we step into Q4 of 2024. The resilience shown by Bitcoin, holding above $62,000 on Gate.io, is a testament to its maturity as an asset class and the growing acceptance it has garnered in the mainstream market.

In the final quarter of 2024, the value of Bitcoin continues to be robust, staying above $62,000 on the exchange Gate.io. This resilience is primarily due to optimistic indicators stemming from both blockchain analysis and derivative market statistics.

Based on the insights from financial experts, it appears that traders are preparing for another surge in prices, given Bitcoin’s noticeable rebound over the past 1.5 months following its dip to around $49,500 on August 5, also known as “Black Market Day.

As a researcher, I’ve been closely observing the trends in Bitcoin exchange reserves, and my findings suggest a significant decrease. Over the past month, CryptoQuant’s data shows that we’ve witnessed a drop from around 2.75 million Bitcoin on centralized platforms to approximately 2.67 million—a reduction of about 3%. This is the lowest level we’ve seen in several years, indicating a potential shift in the market dynamics.

The data also indicates an 11% reduction in Bitcoin reserves on centralized exchanges since the beginning of the year, coinciding with a nearly 43% increase in Bitcoin’s price since January. Therefore a lower supply of coins on exchanges typically eases selling pressure, which can support further price increases.

Positive Indicators in the Options Market

Crypto experts have highlighted that signals from the derivatives market indicate a growing expectation among traders of an increase in Bitcoin’s value. They further mentioned that the current market mood is optimistic, as there is a significant focus on the $100,000 call option for Bitcoin, suggesting a bullish outlook at this price level.

The distribution of derived data for imminent expirations indicates a significant cluster of options for calls set at $100,000 and $105,000. The most actively traded option contract in the last 24 hours is a call option with a strike price of $75,000, which expires at the end of this month.

Additionally, the specialist noted that the futures market associated with Ethereum exhibits a comparable level of enthusiasm. Currently, the maximum open interest is observed at the $4,000 strike price for September call options, and this is closely followed by the $6,000 strike price for December options.

It was noted by the expert that there’s a significant absence of put options among the open interest distributions for both Bitcoin and Ethereum. Instead, the top 10 open interest positions are all call options, indicating a robustly optimistic outlook among traders.

BTC Price Reacts to Fed Chair

On Friday, the value of Bitcoin increased due to indications from Federal Reserve Chair Jerome Powell that interest rates might decrease soon. This implies that the U.S. Federal Reserve is content with the decreasing inflation and is focusing more on the strengthening signs of labor market weakness.

Powell stated that the direction of policy is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving economic outlook, and the balance of risks. He made these remarks during his keynote address at the Jackson Hole Economic Policy Symposium in Wyoming. Following Powell’s comments, Bitcoin’s price rose above $63,500.

With growing optimism, it’s believed that the Federal Reserve may soften its approach towards inflation, following unchanged benchmark interest rates since July 2023. Currently, there’s approximately a one-third chance (32%) of a 0.50% rate reduction in September, while a more likely scenario (67%) suggests a 0.25% cut, according to CME Fedwatch data.

As an analyst, I observed a significant jump in inflation rates last June 2022, reaching a 40-year peak of 9.1%. This escalation was primarily fueled by the robust rebound of the U.S. economy from its pandemic-induced slowdowns. Consequently, in an effort to curb rising consumer prices, the Federal Reserve took action, raising interest rates to levels not seen since 2007.

21Shares’ research associate pointed out that usually, a reduction in interest rates is beneficial for assets considered risky, as they tend to gain value when more people invest due to lower borrowing costs. Furthermore, she noted that Powell’s comments provided comfort to investors, suggesting that the Federal Reserve might adjust its policy if forthcoming economic data matches predictions.

Conclusion

In the final quarter of this year, whether Bitcoin experiences another bullish trend may hinge on several key elements, with the Federal Reserve’s rate cut being the primary influencer. As anticipation builds, crypto enthusiasts are preparing for Bitcoin to potentially hit the significant milestone of $100,000.

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2024-09-21 14:12