Bitcoin price has increased as traders expect interest rate hikes at the upcoming Federal Reserve Open Market Committee (FOMC) meeting. However, the next trend depends on the reaction of Bitcoin in its descending channel.
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Summary of analysis
- The liquidation of short positions along with the release of economic data and expectations for an interest rate cut at the next Federal Reserve meeting have caused the price of Bitcoin to rise.
- Bitcoin analysis shows that the price of BTC can move towards the upper trend line of its channel at $68,250 or be directed towards the lower trend line at the level of $50,600 as the price declines.
According to Cointelegraph, the price of Bitcoin
BTC:
It rose yesterday as trading markets opened and the latest US economic data was released. This data has fueled a sense of risk-taking in the digital currency market.
Bitcoin rose 2.15% to hit a high of $58,560 yesterday and is now trading at $57,881 with some pullback, data from TradingView shows.
The liquidation of $20 million short position has helped the price growth
One of the reasons that caused the growth of Bitcoin price in the past day and night was the liquidation of many more short positions compared to long positions.
More precisely, the Bitcoin derivative market has seen the liquidation of 27.39 million dollars of trading positions in the last day and night, of which 19.97 million dollars were related to Bitcoin short contracts.
The liquidation of a short position means that the amount of that position must be bought by a trader or broker. This could cause the price of BTC to rise.
Meanwhile, Bitcoin Open Interest (OI) has increased from $28.30 million on September 8 (18 September) to $30.02 million on September 12 (22 September).
In addition, the funding rate of Bitcoin has become a positive number by being at 0.0483%. This means that long traders now have to pay short positions in order to open their positions. The funding rate of Bitcoin has increased significantly compared to the value of -1365% on August 17th (August 27th).
The growth of Bitcoin's funding rate and open interest indicates an increase in speculative transactions, or in other words, a sign of increased confidence in the market.
This issue can also reflect traders' predictions of the future trend of Bitcoin price, who are probably waiting for large price fluctuations or a strong upward movement.
Bitcoin price analysis
Technical analysis of the Bitcoin price chart shows that the price growth in the last 24 hours is part of a reversal trend. This reversal trend has started after the price hit the lower trend line in the descending channel pattern on September 6 (16 September).
Currently, the Bitcoin price rally can move towards the resistance formed by the intersection of two 50-day (yellow wave) and 200-day (purple wave) EMAs at the level of $59,500. However, the intersection of these moving averages may form a death crossover.
A death cross is a bearish pattern and is formed when a short-term moving average falls below a longer-term moving average. This pattern can be a signal of a possible price decrease in the future. If this pattern works as it should, Bitcoin price could erase some of its recent gains by retesting the lower trend line of its channel (around $50,600) in the second half of September.
On the other hand, an upward breakout of the 50-day EMA could lead the Bitcoin price towards the channel's upper trend line around $68,250 in the next few weeks. The upward divergence in the RSI indicator also reinforces this scenario.
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