Bitcoin (BTC) has rallied over 22% in the past two weeks to trade at around $63,200, the highest level in almost two months. This gain follows a drop to $52,000 on September 6. The Federal Reserve's decision to cut interest rates is a primary driver behind this price increase, pushing BTC to a local high of $64,200 on September 20.
Despite this positive momentum, BTC is just below a critical resistance level of $65,200, established on August 25. A failure to breach this level could signify a persistent downtrend, as seen in the daily Bitcoin chart since its all-time high of $73,666 in March. This pattern of lower highs suggests continued downward pressure on Bitcoin’s price.
A significant concern raised by Bitfinex is the discrepancy between BTC’s price gains and open interest in futures markets. Open interest has risen faster than BTC’s price, indicating that speculative trading, rather than strong spot market demand, may be driving these gains. This divergence hints that the recent price movements could be more speculative in nature.
Earlier this month, Bitcoin's rise to $62,000 was largely driven by spot market buying, in contrast to the current situation. While increased open interest might suggest more speculative interest, it does not directly imply bearishness. Open interest reflects the total value of outstanding contracts, not leverage in the market.
The Bitfinex report concludes that while renewed speculative interest might be beneficial, traders should remain cautious in the absence of clear indicators of sustained bullish momentum. The recent price movements and speculations call for careful market reassessment.
