Bitcoin has experienced a decline in the past two days, retreating from a high of $64,960 on August 26 to $62,300. Despite this recent dip, several key factors suggest that Bitcoin could rebound and potentially test the critical resistance level of $68,000.
- Rising Futures Open Interest: Data from SoSoValue indicates a significant uptick in Bitcoin futures open interest, reaching $34.7 billion on August 26. This figure is the highest since August 2 and represents a substantial increase from the month’s low of $26.65 billion. The rising open interest, which tracks the number of unsettled contracts, signals heightened market participation and demand.
- Spot Bitcoin ETF Inflows: The Bitcoin exchange-traded funds (ETFs) market is also showing strong signs of demand. On August 26, most ETFs saw inflows for the eighth consecutive day, with total inflows rising to over $202 million. This marks an increase from Friday’s $252 million. The iShares Bitcoin Trust and other major funds have seen significant investments from hedge funds and Wall Street banks, including Millennium Management, Citadel, Schonfeld, Susquehanna, Goldman Sachs, and Morgan Stanley.
- Increase in Bitcoin Addresses: On-chain data reveals a rise in active Bitcoin addresses. The number of active addresses increased to 671,000 on August 6, up from 538,000 earlier in the month. New Bitcoin addresses also grew to 264,000 on Monday, indicating ongoing demand within the crypto community.
- Federal Reserve Rate Cuts: Bitcoin historically benefits from Federal Reserve interest rate cuts. Jerome Powell’s recent statement about potential rate cuts starting in September could boost Bitcoin’s price. Past patterns show Bitcoin performing well during periods of monetary easing, such as during the COVID-19 pandemic and in 2017, while suffering when rates were increased.
The $68,000 level is significant as it aligns with a series of lower highs Bitcoin has encountered since March. Breaking above this resistance could signal a bullish trend, following previous highs of $73,800 in March, $72,000 in June, and $70,000 in July.
