On Thursday morning, Bitcoin passed the $62,000 mark, reaching $62,190, a day after the Federal Reserve announced a significant rate cut.
Meanwhile, Ethereum, while up 5% at $2,435, underperformed Bitcoin, up 1% over the same two-week period.
This Bitcoin price volatility followed a period of volatility triggered by the Fed's interest rate decision. Initially, Bitcoin rose to $61,300 before retreating to $59,400. However, bullish momentum soon took over, pushing the price towards $62,500 before pulling back a bit.
As the broader cryptocurrency market grew with Bitcoin, it sparked a lot of liquidity. Distributed crypto traders saw $204.3 million worth of contracts liquidated in the past 24 hours, according to Coinglass data. Of this, $130.5 million were short positions (bets on price) and $73.8 million were long positions, indicating that the market was biased when prices rose.
The Federal Reserve's rate cut, the first in more than four years, surprised many on Wall Street. Most analysts had expected a more modest 25 basis point cut, but the larger 50 bps cut signaled a more assertive strategy to ease monetary policy, matching investor hopes for swifter action amid ongoing economic uncertainty.
Alex Kuptsykevich, senior market analyst at FxPro, wrote in a note to Decrypt that increased appetite in the markets after the Fed's decision helped cryptocurrencies to record highs over the past three weeks.
The crypto market has been moving in a downward corridor since mid-March, and only the recent surge of more than $2.25 trillion can change this trend.
“The downtrend has been in place since March, and the previous peak was around $64,000, corresponding to the 200-day moving average. We believe that at this stage Bitcoin may face strong resistance, which will clear the way for it to overcome, “said Kuptyskevic.
Historically, low interest rates have led to more investment in riskier assets, including digital currencies, said Chris Aruliah, head of institute at Baybit.
However, Arulia warned of potential challenges posed by economic uncertainty and market volatility. Moreover, on-chain data suggests that Bitcoin's price movement may hinge on the behavior of short-term holders.
Analysis from CryptoQuant highlights that the average purchase price of Bitcoin holders over 1-3 months has historically served as a key support or resistance level.
Speaking with Decrypt, Pi42 co-founder and CEO Avinash Shekhar focused on Bitcoin's price volatility at the critical $60,000 level.
“Short-term holders have been selling since August, indicating that prices may be lower, while long-term holders are waiting for support above $60,000. This has created a battle between bulls and bears,” said Shekhar.
He added that further price declines could propel Bitcoin forward, making the $60,000 level a critical battleground. “A break above $62K would bring a high momentum, while a break below $60K could extend the selling pressure.”
Edited by Stacy Elliott.
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