Bitcoin (BTC), the largest cryptocurrency globally, has surged over 22% in the last fortnight, now trading around $63,200, after experiencing a significant decline to $52,000 on September 6. This marks the highest price BTC has achieved in nearly two months.
Key Resistance Level at $65,200 Ahead
A recent report from the digital asset trading platform Bitfinex states that this price surge was primarily fueled by the Federal Reserve’s (Fed) decision to lower interest rates, helping BTC reach a new local high of $64,200 on September 20.
Despite this upward momentum, Bitcoin remains just below a crucial resistance threshold of $65,200 established on August 25. The report highlights that failing to break this level could validate a concerning trend that has impacted BTC’s price behavior since its all-time high of $73,666 in March.
Since reaching that peak, Bitcoin has consistently struggled to surpass previous highs, instead forming new local lows, indicating a continued downtrend. This pattern of creating progressively lower highs is visible on the daily Bitcoin chart, suggesting a downward path since mid-March.
The daily BTC/USDT chart above shows that this repetitive price activity has been characterized by a persistent and continuous downtrend since the peak in March.
However, additional volatility caused by macroeconomic concerns led to another decline on August 5, where BTC dropped to its lowest level in six months, plummeting from $70,000 since late July to around $49,000.
What Contributed to Bitcoin’s Recent Gains?
One significant concern raised by Bitfinex is the gap between BTC’s price gains and open interest in the futures markets. As BTC climbed, open interest surged even faster, reaching $19.43 billion—up from $18.93 billion on August 25—while Bitcoin’s price remained approximately $1,000 short of its local high.
This divergence indicates that much of the recent price fluctuation may be driven by speculative trading in futures and perpetual contracts, rather than robust demand in the spot market.
Earlier this month, Bitfinex noted that Bitcoin’s ascent to around $62,000 was primarily supported by strong spot market buying, contrasting with the current market dynamics.
While the increase in open interest might indicate heightened speculative interest in Bitcoin, it does not directly suggest bearish sentiment. The report clarifies that open interest is not a conclusive metric for market leverage; rather, it signifies the total value of outstanding contracts.
Ultimately, the report intimates that this renewed speculative interest could be advantageous as traders return from their summer breaks and reassess their positions following the interest rate cut. Nevertheless, Bitfinex advises that, in the absence of clearer signals of sustained bullish momentum, market participants should approach the situation with caution.
Featured image from DALL-E, chart from TradingView.com