Bitcoin’s Reaction to Powell’s Speech and Growth Signals

During a speech in Jackson Hole, Wyoming, Federal Reserve Chairman Jerome Powell stated that “the time has come to lower the rate.” The pace of monetary policy easing will depend on economic indicators. 

The next meeting is scheduled for September 18. Market participants anticipate a rate cut of 0.25% with a probability of 67.5%, and 0.5% with a probability of 32.5%. 

Bitcoin rose to $62,350 following Powell’s speech but soon retreated. 

A rate cut is considered a positive signal for financial markets and cryptocurrencies in particular, as the Fed provides greater liquidity, which can be directed towards asset purchases.

For more on how the Fed rate affects Bitcoin, see ForkLog’s cards:

Other Positive Factors

Data from CryptoQuant and the largest options exchange, Deribit, indicate moderate optimism in the cryptocurrency market, writes The Block. 

Bitcoin reserves on centralized exchanges fell to a multi-year low in August. Since late July, the figure dropped from 2.75 million to 2.67 million. 

A decrease in BTC on centralized exchanges is often seen as a positive sign, suggesting long-term investors are moving coins to non-custodial wallets, reducing seller pressure. 

SynFutures co-founder Rachel Lin highlighted the derivatives market, pointing to bullish sentiments among traders.

For Bitcoin, the highest open interest is in call options with a December expiration and a strike of $100,000, she noted. The largest trading volume in the past 24 hours was recorded with options contracts expiring at the end of the month at $75,000. 

Lin noted that the derivatives market for ETH also shows optimism: the highest open interest is in call options with a strike price of $4,000 in September, followed by contracts with a $6,000 strike in December. 

She pointed out a significant shortage of put options. In the top 10 by open interest for BTC and ETH, only call options are included. 

Tether Printing

Adding to the positive factors is the issuance of USDT — Tether printed 3 billion tokens in a week. Since August 5 (when Bitcoin fell below $50,000, and altcoins also dropped significantly), 3.22 billion USDT has flowed to exchanges from the company’s treasury. 

Fear and Greed Index

Meanwhile, the Fear and Greed Index signals fear in the market — it has reached 34 points.

However, this is above the level the metric reached on August 6 — when the index fell to 17 points amid a sharp deterioration in sentiment in the crypto market.

Bitcoin options indicated trader optimism following the US elections, according to a Wintermute report.

Earlier, experts noted the presence of prerequisites for the resumption of Bitcoin’s bull run.