The price of Bitcoin has surged past $117,000 following the Federal Reserve’s announcement of its first interest rate decrease this year, reigniting optimism in risk assets.
Summary
- Bitcoin is currently priced at $117,476, reflecting a 0.9% increase over the last 24 hours, with trading volume rising by nearly 50%.
- The Federal Reserve reduced rates by 25 basis points to a range of 4.00%–4.25%, marking its first cut since December 2024.
- Data from derivatives indicates an increase in open interest, suggesting enhanced market participation.
As of the latest update, BTC was trading at $117,476, a 0.9% rise for the day and a 3% increase over the week. The 24-hour spot trading volume for Bitcoin surged by 49.6% to $60.9 billion, showcasing renewed interest following a quieter September.
Activity in the derivatives markets was even more pronounced. Bitcoin (BTC) futures volume soared by 65.9% to $119.8 billion, with open interest climbing 1.6% to $85.7 billion, according to Coinglass data.
The increasing open interest alongside rising volume indicates that traders are entering new leveraged positions rather than merely closing old ones. This combination often precedes larger market movements, hinting at potential volatility in the near future.
Fed’s rate cut enhances liquidity prospects
On September 17, the Federal Open Market Committee voted 11-1 to reduce the federal funds rate by 25 basis points, bringing it to a range of 4.00%–4.25%. This is the first rate cut since December 2024 and is largely attributed to increasing unemployment, which reached 4.3% in August, the highest level since 2021.
Chairman Jerome Powell described this move as “risk management,” indicating that employment concerns currently take precedence over inflation risks, despite inflation remaining above target (with headline CPI at 2.9% and core at 3.1%). The cut has led to a weaker U.S. dollar, higher equity prices, and a boost in cryptocurrency markets.
Discussing the effects on digital assets, Andrew Forson, President of DeFi Technologies, remarked to crypto.news:
“There will be continued inflows into innovation and tech-related businesses since the returns they stand to offer will be considerably higher than less risky government-backed fixed income instruments, whose return profiles will be reduced.”
Forson also pointed out that staking-focused digital asset projects are increasingly appealing compared to traditional fixed-income options, offering both yield generation and potential capital growth.
Technical analysis of Bitcoin price
From a technical standpoint, Bitcoin is positioned within the upper range of its Bollinger Bands, facing resistance near $118,700 and support at approximately $112,900. The Relative Strength Index (RSI) stands at 62, indicating neutral momentum but leaning towards an overbought condition.
Both the 10-day and 20-day moving averages are positioned below the current price, signaling a continuing bullish trend. The MACD is also indicating a buy signal, though momentum indicators like Stochastic RSI and Williams %R caution against overextending as they approach overbought territory.
In a bullish scenario, breaking above $118,700 could lead to a retesting of the mid-August peak of $124,128. Conversely, if Bitcoin fails to maintain above $115,000, the next support level will be the 100-day SMA, situated around $111,600.
