Main Points:
- Bitcoin hits $65,000, the highest in two months
- Optimistic economic outlook boosts risk assets
- U.S. economic data supports market sentiment
- Market participants foresee a potential correction
- Caution around upcoming options expiration
Bitcoin Reaches $65,000: A Two-Month High
On September 26, Bitcoin (BTC) surged past the $65,000 mark, a level not seen in nearly two months. The spike followed the opening of Wall Street’s trading session, driven by the broader rise in risk assets linked to favorable macroeconomic events in the U.S.
Data from TradingView showed that the BTC/USD pair touched $65,521 on Bitstamp, confirming the highest price level for Bitcoin since early August. This bullish movement came after U.S. Treasury Secretary Janet Yellen expressed an optimistic outlook on the American economy in a CNBC interview. Yellen’s remarks were interpreted as signaling confidence that the Federal Reserve (Fed) could achieve a “soft landing” in its efforts to curb inflation without severely damaging economic growth.
Diverging Views Between Yellen and Powell
Yellen’s positive assessment contrasts with Fed Chairman Jerome Powell’s more measured tone at the 2024 U.S. Treasury Market Conference held by the New York Federal Reserve. Powell refrained from overly optimistic projections and instead emphasized the need for the U.S. financial system to maintain its liquidity and operational efficiency.
In Powell’s words, “The entire U.S. financial system is built on its ability to quickly and efficiently convert Treasury securities into cash. We all bear the responsibility to ensure these markets continue to function at a high level.”
U.S. Economic Data Boosts Risk Appetite
The U.S. second-quarter GDP data, which came in at 3.0% as expected, coupled with slightly lower-than-anticipated unemployment claims, helped fuel investor confidence. The S&P 500 also reached a new intraday high on the same day, extending gains since Powell’s announcement on September 18, when the Fed cut interest rates for the first time in four years.
A Potential Correction Before Further Gains?
While Bitcoin’s momentum appears strong, market analysts are signaling that a correction could be necessary before further gains. Skew, a well-known trader, pointed out on X (formerly Twitter) that liquidity at the $65,000 level has been cleared, and the next liquidity zone is $66,000, while buying liquidity is found between $62,000 and $61,000.
“Given the large gap, we could see a correction before further upside. A full correction could signal weakness,” Skew noted.
Data from CoinGlass highlighted the concentration of liquidity on both sides of the spot price across exchange order books, supporting the possibility of a brief retracement.
Whales Remain Cautious Amid Expiry of Major Options
Whale Panda, a prominent Bitcoin trader, urged caution, noting that while Bitcoin’s break above $65,000 shattered expectations of a persistent lower high, significant headwinds remain. Specifically, the market is bracing for a major options expiration on September 27.
“Breaking above $65,000 invalidated the ‘lower high forever’ thesis, but with a large quarterly options and futures expiration tomorrow, I expect some turbulence,” Whale Panda commented on X.
Bearish Sentiment Persists Among Analysts
Justin Bennett, a cryptocurrency market analyst, further suggested that Bitcoin could still dip below $60,000 before aiming for higher liquidity targets around $68,000 to $70,000. He commented on the possibility of a brief shakeout of long positions in the $57,000 to $58,000 range before BTC resumes its upward trajectory.
Despite the optimism in the broader market, traders and analysts remain cautious, watching closely for any signs of weakness or potential pullbacks.
Bitcoin’s recent rally above $65,000 signals renewed confidence in the market, spurred by an optimistic U.S. economic outlook. However, market participants are mindful of potential corrections and the looming options expiration, which could introduce volatility in the short term. With liquidity zones identified both above and below the current price, traders should remain vigilant as Bitcoin navigates this crucial period.
