Bitcoin's price hit a three-week high on Friday. It continued to rise over the weekend as traders felt optimistic about several positive developments ahead. One major factor is the U.S. Federal Reserve's decision to end its rate hike cycle, which peaked last July at a target range of 5.25% to 5.5%.
Another important factor is the upcoming U.S. presidential election in November. Candidates like Donald Trump and Kamala Harris are expected to influence the future of crypto policy in the country. Recently, Federal Reserve Chairman Jerome Powell hinted at possible rate cuts next month. This suggests the central bank is satisfied with cooling inflation and is paying more attention to the growing weakness in the labor market.
These positive signals have pushed risk assets, including cryptocurrencies, higher. Bitcoin rose above $62,000 for the first time since August 2. It even peaked just below $65,000 before settling around $64,000, according to CoinGecko data. Good news from the U.S. labor market also boosted investor confidence that the Fed might cut rates in September.
Ryan McMillin, chief investment officer at Merkle Tree Capital, said, “The Bureau of Labor Statistics revised away 818,000 jobs. These were new jobs reported in previous months' non-farm payroll data.” He pointed out that this data was crucial for supporting the narrative of a “hot jobs market,” but it appears that narrative never really existed. He also mentioned that selling pressure from Germany and the U.S. government, along with issues related to Mt. Gox and Genesis, seems to be fading.
McMillin added, “This setup could allow Bitcoin to overcome its historical weakness in September and potentially reach a new all-time high. After six months of sideways trading, a strong rally seems increasingly likely before the year ends.” Since late February, Bitcoin has fluctuated between $49,000 and $71,000. This followed the SEC's approval of several exchange-traded funds linked to the asset and the subsequent market correction.
QCP Capital echoed McMillin's thoughts in a note to investors on Friday. They stated that Bitcoin is now trading “comfortably in the familiar $61,000 to $70,000 range.” They also noted that selling supply is “slowly depleting,” and spot ETFs have seen net inflows in ten of the last twelve days. This reflects a growing preference among investors for the asset. The rally on Friday was mainly “spot-driven,” according to QCP. They suggested that if the $62,000 price holds, we should expect an increase in leveraged long positions as the summer holidays come to an end. This means traders might start borrowing funds to boost their investments, betting that the asset's price will rise.