Bitcoin (BTC) rallied to $65,000 over the weekend (Aug. 24 to Aug. 25), extending the three-week recovery from the Aug. 5 crash to $49,500.
With prices returning to many investors’ comfort zones, traders are probably wondering whether to expect more of the same range trading, consolidation or a range expansion to new highs.
Let’s look at a few Bitcoin price data points to see if it’s time for BTC to break out of its current range.
DXY falls to a year-to-date low
The interplay between the US dollar Index (DXY) and BTC is a frequent indicator traders watch when estimating where Bitcoin price might go. For many the logic is a weak DXY is often matched with a rally in BTC price and vice versa. Last week, DXY fell to a year-to-date low under 101 and as shown on the chart below, Bitcoin price climbed out of the $53,000 range.
DXY vs BTC 3 day chart. Source: TradingView
Real Vision chief crypto analyst Jamie Coutts recently highlighted the DXY to BTC price action dynamic, saying,
“Unless something fundamentally has changed, we are entering what @RaoulGMI refers to as the banana zone, or what I would describe as Bitcoin batshit season.”
Related: Bitcoin exchanges are witnessing the third-biggest net daily outflow of 2024
Powell finally says what crypto pundits have been waiting for
On, Aug. 23, US Federal Reserve Chair Jerome Powell finally said that the time is ripe for an interest rate cut, although he declined to specify the size of the cut. Many crypto traders have grounded a large portion of their investment thesis on their belief that Fed rate cuts will eventually lead back to the previous policy of quantitative easing and that this money supply expansion will play a role in Bitcoin’s price discovery.
CryptoQuant analysts noted Bitcoin price rising in excess of 6% shortly after Powell’s statement and that “2-year bond yields declined to the lowest level since March 2023.”
Bitcoin price reaction to Aug. 23 Fed Jackson Hole statements. Source: CryptoQuant
Market participants at Wall Street also have bullish expectations for stocks now that the Fed has confirmed that interest rate cuts are coming.
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