Bitcoin posted a more than 3% gain to trade above $86,900 on Friday, reflecting a cautious recovery fueled by market expectations of impending Federal Reserve interest rate cuts, even as trading volume remained subdued following recent massive liquidations.
The leading cryptocurrency reached $86,928.41, marking a 3.28% increase over the past 24 hours. This rebound follows a period where leveraged positions saw approximately $2 billion in liquidations, contributing to earlier price declines.
Market sentiment improved amid growing expectations of a 25 basis point reduction in Fed interest rates, countering previous fears of no cuts. However, daily trading volume for Bitcoin stood at $46.42 billion, a significant 33.80% drop from its 30-day average, suggesting the current rally may lack strong conviction.
Bitcoin’s market capitalization reached $1.734 trillion. Technical indicators showed the Relative Strength Index (RSI) at 35, a level typically suggesting the asset is oversold and potentially due for a rebound. The Moving Average Convergence Divergence (MACD) also crossed upward, signaling increasing momentum.
Despite the recent uptick, Bitcoin’s price remained below its 7-day simple moving average (SMA-7) of $89,299.56 and its 30-day simple moving average (SMA-30) of $102,091.80, indicating underlying weakness.
On-chain data suggested a resilient network, with active holders increasing by 1.5% to 1.2 million, and daily transactions holding at 450,000. In the derivatives market, open interest in futures rose 5% to $30 billion, and perpetual funding rates turned positive at 0.01%, reflecting a bullish bias.
Social media sentiment was mixed but leaned 55% positive, partly influenced by discussions around potential legislative support like the ‘New Bitcoin for America Act.’ However, the dollar index (DXY) strengthening could pose a macroeconomic risk.
Key price levels for traders include a support at $85,000, representing a significant psychological and Fibonacci retracement level. Resistance is observed at $89,000, aligning with the current SMA-7. Implied volatility in options stood at 65%, higher than the average of 55%, indicating expectations for daily price swings of around 5%.
Fundamentally, Bitcoin’s circulating supply stood at 19.8 million out of a total of 21 million. While partnerships with institutions like BlackRock have increased, clients predominantly view Bitcoin as a reserve asset rather than a primary payment method.
The Network Value to Transactions (NVT) ratio, a valuation metric, was at 120, above its historical average of 100. This suggests Bitcoin could be overvalued, though some analysts justify this by growing institutional adoption. Bitcoin maintains a 55% market dominance, significantly higher than competitors like Ethereum, which has a market capitalization of $400 billion.