“Vanguard Effect” Lifts Bitcoin? Key Levels to Watch as BTC Recovers

Bitcoin (BTC) bounced back strongly since it hit $85,000 on Monday. In the past 7 days, the top crypto has booked a 7% gain as market sentiment seems to be improving ahead of the next FOMC meeting.

The crypto community is partially attributing this bounce to a phenomenon called the “Vanguard Effect.”

The second-largest asset management company in the United States lifted a long-standing ban on digital products this week and is now allowing investors to buy and sell exchange-traded funds (ETFs) linked to multiple tokens, including Bitcoin.

Long-term investors have been increasingly embracing cryptocurrencies and adding them to their portfolios to improve their risk-reward profile.

Vanguard manages over $3 trillion for its customers. Hence, this move could open up the floodgates as billions of dollars can now freely flow to BTC-linked ETFs.

That said, data from Farside Investors does not show any meaningful change to Bitcoin ETF’s assets yesterday, as net inflows ended the day at just $58 million. Maybe investors are still proceeding with caution at a point when market volatility remains quite high.

Market Sentiment Improves Ahead of FOMC Meeting

Sentiment has picked up lately as the Fear and Greed Index recovered from a record low of 11 to 22 at the time of writing. Although the index is still in “fear” territory, the latest rebound may have instilled some confidence among risk-takers who may think the bottom is already in.

Fear and Greed Index – Source: CoinMarketCap

As we mentioned in previous Bitcoin price predictions, the last time that the F&G Index reached such low readings, the market bounced back with enough force to push the token to a new all-time high just a few months later.

This shift in market sentiment coincides with the upcoming FOMC meeting next week. Analysts once again expect a 25 basis points rate cut after a brief hiccup pushed the odds to as low as 40% a few weeks ago.

Paired with an improvement in the market’s sentiment and Vanguard’s landmark decision, Bitcoin could be about to make a strong comeback.

Bitcoin Finds Strong Support at $80K

The 4-hour chart shows that an uptrend has formed already after BTC found strong support at $80,000. The Relative Strength Index (RSI) has moved to positive territory in this lower time frame after jumping above the 14-day moving average while also climbing above the mid-line.

BTC/USD 4H Chart (Bitstamp) – Source: TradingView

We can identify a few pivotal areas for both buyers and sellers by using a delta volume profile. Right now, volumes favor bulls by a long shot as delta volumes stand at 83% since the token bounced from $80,000.

The $87,500 level seems to be the most heavily contested area by both bulls and bears, and we can see that several imbalances have occurred at that level. As long as the price stays above that mark, the odds of a strong move upwards remain high.

The $100K zone is the most probable target at this point, meaning a 7.5% upside potential for the next few days. However, the price still needs to overcome the 200-period exponential moving average in this time frame, which currently sits at $95,000.