Positive factors for Bitcoin include the results of the U.S. presidential election in November and anticipated interest rate cuts next month.
Bitcoin’s price hit a three-week high on Friday, continuing its upward momentum into the weekend as traders remained optimistic about several favorable factors expected in the coming months.
One of the key factors is the U.S. Federal Reserve’s decision to end its rate hike cycle, which peaked in July last year with a target range of 5.25% to 5.5%. Additionally, the outcome of the U.S. presidential election in November, with candidates Donald Trump and Kamala Harris likely to shape the future of crypto policy in the U.S., is also seen as a positive influence.
Last week, Federal Reserve Chairman Jerome Powell hinted at potential rate cuts next month, suggesting that the central bank is now more focused on the weakening labor market, having achieved its goal of cooling inflation.
Meanwhile, traders betting on further declines for Bitcoin could be caught off guard in the coming days and weeks, as the derivatives market shows signs of a setup primed for a short squeeze. According to research from K33, recent negative perpetual swap funding rates and a spike in open interest indicate aggressive shorting, creating a scenario ripe for a short squeeze.
The positive sentiment drove risk assets, including Bitcoin, higher, with the cryptocurrency rising above $62,000 for the first time since August 2. Over the weekend, Bitcoin climbed further, reaching just below $65,000 before settling around $64,000, according to CoinGecko data.
Favorable U.S. labor market data also strengthened investor confidence that the central bank would likely cut rates in September. Ryan McMillin, chief investment officer at Merkle Tree Capital, noted that the Bureau of Labor Statistics had revised away 818,000 jobs that were previously reported, challenging the narrative of a “hot jobs market.” McMillin added that sell pressure from Germany, the U.S. Government, Mt. Gox, and Genesis appears to be diminishing, creating a setup that could see Bitcoin defy its historical September weakness and potentially reach a new all-time high. After six months of sideways trading, a strong rally is increasingly likely before the end of the year, he said.
Bitcoin has fluctuated between $49,000 and $71,000 since late February following the SEC’s approval of multiple exchange-traded funds linked to the asset and the subsequent cooling of market excitement.
QCP Capital echoed McMillin’s sentiment, noting in a Friday update to investors that Bitcoin is once again trading comfortably within the familiar $61,000 to $70,000 range. The selling supply is gradually depleting, and spot ETFs have seen net inflows in 10 of the last 12 days, reflecting recent investor interest in the asset.
QCP also mentioned that Friday’s rally was primarily spot-driven and that the market could see an increase in leveraged long positions if Bitcoin’s price remains above $62,000 as the end of the summer holidays approaches. This suggests that traders might borrow funds to increase their investment, anticipating a rise in Bitcoin’s price.
