Bitcoin experienced its most successful September in over a decade, despite a recent price correction. This article explores the potential reasons for this growth and provides forecasts for the future.
ETF Inflows
According to CryptoQuant, a significant portion of Bitcoin's growth is linked to increased net inflows into spot Bitcoin ETFs. BTC-based products attracted over $1 billion in the past week, starting on September 9, shortly after Bitcoin's price fell below $53,000. Last week also saw positive Bitcoin ETF flows, with BlackRock, Fidelity, and Ark reporting combined inflows of $324 million on September 26, indicating strong demand from U.S. investors.
Consequences of the Rally
Bitcoin's 20% surge from under $53,000 to $63,500 put many investors back in profit. CryptoQuant focused on Short-Term Holders (holding BTC for 155 days or less), whose average purchases came at $63,000, making this level a support. However, if most of them decide to sell off their holdings for minor gains, Bitcoin's price could tumble. Additionally, the futures market is showing signs of overheating, as open interest reached over $19 billion, a level previously associated with price drops.
Role of the Federal Reserve
Another significant factor behind Bitcoin's rise was the Federal Reserve's announcement of a 0.5% key interest rate cut on September 18. This led to a price surge from $59,000 to over $66,500 within the following week, as lower interest rates make money 'cheaper'. Monitoring the Fed's actions closely is crucial, as further rate cuts could support the continuation of Bitcoin's bullish rally.
Bitcoin's 20% surge in September was driven by several factors, including ETF inflows and the Federal Reserve's interest rate cut. However, the overheated futures market and potential short-term holder selling could lead to price corrections. Watching the Fed's future actions will be crucial for understanding Bitcoin's prospects.
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