Bitcoin Soars as Interest Rate Hike Fears Subside…Next Target $86,000?

▲ Bitcoin (BTC), Dollar (USD) ©

Bitcoin (BTC) swiftly recovered to $80,000, boosted by easing concerns over the U.S. Federal Reserve's (Fed) interest rate hike and a massive short squeeze.

According to cryptocurrency market data aggregator CoinMarketCap on September 3 (local time), Bitcoin rose 5.58% over 24 hours to $81,614.66, outperforming the overall cryptocurrency market's growth rate. Its correlation with the S&P 500 index was 97.8%, indicating that this rebound was a concurrent rally of risk assets due to an improved macroeconomic environment.

A key factor driving the uptrend was the dovish remarks by U.S. Federal Reserve Governor Christopher Waller. Waller stated that he would support a freeze in the benchmark interest rate at the mid-September meeting if August inflation data showed a positive trend. As a result, the market's perceived likelihood of an interest rate hike decreased, and U.S. Treasury yields and the dollar's value also fell, leading to an influx of buying into Bitcoin, which is sensitive to liquidity changes.

In the derivatives market, a short squeeze (buying pressure resulting from closing or covering short positions) amplified the gains. Over the past 24 hours, a total of $186.75 million in Bitcoin positions were liquidated, with short positions accounting for $177.43 million. The combination of buying pressure betting on price increases and the forced liquidation of short positions appears to have accelerated the pace of the rebound.

Institutional demand also revived. U.S. spot Bitcoin ETFs recorded a net inflow of $101.15 million on September 2, reversing the previous day's net outflow trend. The market is closely watching whether ETF fund inflows continue and whether open interest in the derivatives market expands to excessive levels.

In the short term, the key is whether the $80,000 support level holds. If Bitcoin maintains this price level, it could challenge the $83,000-$86,000 range, where long-term holders' main purchase prices are concentrated. However, if the daily closing price falls below $80,000, there is a possibility of a correction down to $77,000. The August Consumer Price Index (CPI) to be released on September 11 and the Federal Open Market Committee (FOMC) meeting on September 15-16 are considered key variables that will determine whether the uptrend continues.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*