BTC and $65K: Fed Rate Cut Bets Drive Demand Surge Amid Bullish Market Sentiment

BTC Touches $65,000 on Fed Rate Cut Bets

On Saturday, August 24, BTC advanced by 0.10%, following a 5.97% rally on Friday, closing at $64,097. On Friday, August 23, BTC touched $65,000 for the first time since August 2 on Fed interest rate cut bets.

BTC Demand Spikes on Fed Chair Powell’s Support for Policy Shift

On Friday, August 23, Fed Chair Powell raised investor expectations of a September rate cut, indicating it was time for a policy adjustment.

Powell’s hint of a Fed rate cut boosted buyer demand for riskier assets, including BTC.

Crypto Quant Head of Research Julio Moreno highlighted a marked shift in BTC demand following Powell’s speech, stating,

“Bitcoin demand in the US spiked today as the Fed signaled the cycle of lower interest rates will begin.”

Moreno shared a chart showing BTC/USD price and Coinbase Premium Index trends, saying,

“Price premium on Coinbase is the highest since July.”

The Coinbase Bitcoin Premium Index measures the percentage difference between BTC/USD prices on Coinbase (COIN) Pro and BTC/USDT on Binance. The price differential can signal if US investors are driving more buying pressure than global investors. While Binance serves a larger global investor base, Coinbase is more popular among US investors.

US BTC-Spot ETF Market Inflow Streak Extends to Seven

On Friday, the surge in US BTC-spot ETF market inflows reflected investor sentiment toward the Fed rate path. The upswing in US BTC-spot ETF demand aligned with the Coinbase Bitcoin Premium Index, pushing BTC to $65,000.

According to Farside Investors:

• On Friday, Grayscale Bitcoin Trust (GBTC) saw net outflows of $35.6 million.
• iShares Bitcoin ETF (IBIT) reported net inflows of $86.8 million.
• Fidelity Wise Origin Bitcoin Fund (FBTC) had net inflows of $87.8 million.
• ARK 21Shares Bitcoin ETF (ARKB) saw net inflows of $83.5 million
• Grayscale Bitcoin Mini Trust (BTC) reported net inflows of $50.8 million.
• Eight issuers registered net inflows on Friday, with GBTC being the only issuer to see net outflows.

On Friday, the US BTC-spot ETF market reported net inflows of $252.0 million, the highest since July 22 ($485.9 million).

Key Events to Watch

It could be a pivotal week for the crypto markets, with the US economic calendar in the spotlight.

Consumer confidence figures (Tuesday) could indicate likely spending trends. Weaker confidence would suggest a pullback in consumer spending, supporting a more dovish Fed rate path. US labor market data (Thursday) will also influence sentiment toward the US economy and the Fed rate path.

On Friday, the US Personal Income and Outlays Report could be crucial. Softer inflation figures and weaker personal income and spending may support a 50-basis point September Fed rate hike. A more dovish Fed rate path may boost demand for riskier assets. However, a sharp fall in spending could rekindle fears of a US recession, possibly adversely impacting BTC demand.

US Government Supply Risk

Beyond the economic calendar, the US government’s BTC holdings continue to present a supply risk. The US government currently holds a stockpile of 203,239 BTC. Transfers could fuel speculation of an oversupply, possibly dropping BTC below $60,000.

Investors should remain alert amid possible changes to supply-demand trends. Stay updated with our latest news and analysis to manage exposure to BTC and the broader crypto market.

Technical Analysis

Bitcoin Analysis

BTC hovered above the 50-day and 200-day EMAs, sending bullish price signals.

A breakout from the $64,000 resistance level could support a return to $65,000. Furthermore, a break above $65,000 could give the bulls a run at the $69,000 resistance level.

US BTC-spot ETF market-related chatter, sentiment toward the Fed rate path, and the US economy require consideration.

Conversely, a BTC drop below the $64,000 support level could bring the 50-day EMA into play. A fall through the 50-day EMA may give the bears a run at the $60,365 support level and the 200-day EMA.

With a 58.32 14-Daily RSI reading, BTC could climb to the $69,000 resistance level before entering overbought territory.

Ethereum Analysis

ETH remained well below the 50-day and 200-day EMAs, affirming bearish price signals.

An ETH return to $2,800 would support a move toward the 50-day EMA. Furthermore, a breakout from the 50-day EMA could give the bulls a run at the 200-day EMA and the $3,033 resistance level. However, selling pressure may intensify at the $3,033 resistance level. The 200-day EMA is confluent with the resistance level.

US ETH-spot ETF market-related news also requires consideration.

Conversely, an ETH break below the $2,664 support level may signal a drop to $2,500. A fall through $2,500 may bring the $2,403 support level into play.

The 14-period Daily RSI reading, 49.84, suggests an ETH fall to the $2,403 support level before entering oversold territory.