Bitcoin is pegged below $65k, but several market structure-changing factors are at play.

This week was a real belt-buster on so many levels. Federal Reserve Chairman Jerome Powell finally gave away some of the market by dropping interest rates by 50 basis points.

The S&P 500 is in bull-only mode with gold hitting another all-time high.

Due to the policy change and other reasons, Bitcoin (BTC) exploded and gained strength up to $64,133. Despite the confirmation of the long-awaited Fed policy change, Bitcoin's daily price action has yet to break out of its six-month normal.

As noted in previous weeks, the Bitcoin chart shows a structurally ordered downtrend. On the higher timeframe, the price is showing weekly lows, and forward liquidity drives the price action. Even the move to higher highs from September 18 to September 20 is within the bounds of the current six-month range.

At the time of writing, BTC price could be seen breaking back from resistance last (August 24) above $65,000, the 200-day moving average. If the weekly candle closes below this level, the pattern of weekly lows is still in play.

A natural consequence of the upheaval seen this week is for prices to test support near the 20-day moving average ($60,000 to $58,500 range), especially if traders fail to track the current breakout from sustained spot volume. Over the past 6-months, while spot volumes have been relatively flat, much of Bitcoin's price action has been driven by futures liquidity and options market activity.

Conversely, following this week's FOMC, there has been a sharp increase in Bitcoin open demand and if traders continue to attack the $64,000 to $66,000 zone, there is a chance to enter a descending channel and change Bitcoin's higher timeframe market structure.

As shown in the chart above, the price of BTC has failed to push the downtrend in the channel since April 24 and the bulls will need to find a price above $66,300 to make this a reality.

RELATED: Bitcoin Liquidity Won't Be Enough To Break $70K+ High Range – Here's Why

HighStrike's head of crypto options and derivatives, JJ, hinted that Bitcoin's price movement above the 200-DMA ($64,000) could ignite “massive short liquidity and short call gamma,” but according to the analyst, Coinbase should first “seller kindly remove the wall…”

Traders have been reacting to the Fed's rate cut since the start of Q4 and news from the US Securities and Exchange Commission on September 20 that it approved options on the BlackRock Spot Bitcoin ETF.

Listing options on btc etfs is a more important milestone than you might think.

Derivatives are the foundation of functional markets, and btc and digital assets have a ways to go to catch up with traditional markets. Enter the largest capital market in the world: https://t.co/tpuVPVmJCA

— Kelly Greer (@kellyjgreer) August 15, 2024

According to Charles Edwards, founder of Capriol Investments:

“Q3 is the worst time in Bitcoin. Q4 is the best.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.