Bitcoin (BTC) and the rest of the crypto market continue to perform positively two days after the Federal Reserve hiked rates for the first time in 3 years, and rising volumes indicate that buyers are still interested.
Uncertainty regarding the macroeconomic backdrop kept a lid on BTC’s advance recently. However, now that the roadmap is clearer and the Fed’s stance on monetary policy under new leadership has become evident, the market could be getting ready for its next leg up.
Market Seems to be Looking Beyond Interest Rates
On Wednesday, the new Chairman of the Fed, Kevin Warsh, confirmed what the market already expected — the central bank is fully committed to curb inflation by all means necessary.
The White House’s pressure did little to persuade Fed Governors, while analysts now envision a second rate hike before the end of the year as part of an aggressive strategy to mitigate the negative impact of President Trump’s hostile trade policies and military actions in the Middle East.
Although higher rates are unfavorable for risky assets, a drop to $60,000 per token recently indicated that expectations of hawkish monetary policy actions had already been priced in.
Now, the market is focusing on the future. Even though the Senate voted against pushing the Clarity Act forward, the U.S. Securities and Exchange Commission (SEC) demonstrated its commitment to keep supporting the crypto sector’s growth.
It only took a minor regulatory push in late August to kickstart a rally that pushed the entire crypto market out of bearish territory. Perhaps analysts are expecting similar moves in the future.
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See all Bitcoin forecastsETF Inflows Turn Negative in September, But Bitcoin Trading Volumes Rise
Net inflows to exchange-traded funds (ETFs) have been negative this week, with a total of $460 million being withdrawn from these vehicles. As a result, September inflows have moved to red territory, indicating a shift in sentiment.
The late August rally seems to have exhausted buyers’ ammunition for the time being. However, trading volumes indicate that investors are once again interested in cryptocurrencies, possibly as a result of an ongoing rotation out of inflated AI stocks.
Data from Santiment shows that the 30-day moving average for trading volumes just rose above the 50-day MA, indicating a shift in momentum.
This has happened multiple times in the past two years during the beginning of both strong bull and bear markets. Hence, we still expect that the rally that started last month will continue for what remains of the year, as long as no additional hawkish changes are made to the current dot plot.
Looking at the daily chart, our short-term target of $85,000 for Bitcoin is still in play. We could see the token dropping back to the 200-day exponential moving average (EMA) if volumes dry up amid the absence of positive catalysts.
However, as long as that support area holds, the market’s bullish bias should persist. Meanwhile, the Relative Strength Index (RSI) is still in bullish territory at 55. If it climbs above 60, that could mark the beginning of the token’s next leg up to $85K, and potentially to $100K if positive momentum accelerates.
