Bitcoin (BTC) experienced a 6% surge following the United States Federal Reserve’s decision to lower interest rates by 0.50% on September 18. This resulted in the price of Bitcoin reaching a three-week high of nearly $63,500. However, despite this rally, derivatives metrics suggest that Bitcoin bulls are cautious about increasing leveraged positions, which is putting pressure on the $62,000 support level.
The impact of the interest rate cut and the job market data on Bitcoin’s price is significant. On September 19, the US jobless claims report revealed that weekly filings for unemployment benefits had dropped to a four-month low of 219,000, down from the July peak of 250,000. While the numbers are still relatively high, the decline indicates an improvement in the job market. Stephen Innes of SPI Asset Management stated that the Fed’s focus has shifted to the labor market, as inflation remains stable at 2.5%.
These developments also had a positive effect on US stock markets, with the S&P 500 reaching an all-time high on September 19. Fed Chair Jerome Powell reassured investors by stating that the US economy is in good shape and that the rate cut was a sign of faith rather than panic. Powell further explained that supporting the labor market is crucial when it is strong, rather than waiting for layoffs to occur.
Despite these macroeconomic shifts, some investors believe that the upcoming US presidential election in November could have a more significant impact on the global economy. Billionaire investor Ray Dalio expressed concerns about the challenges to society’s ability to function smoothly, highlighting the need for moderates to come together and implement reform to address the high cost of living.
Given the negative stance of the Biden administration towards the cryptocurrency sector, it is understandable that Bitcoin derivatives traders are cautious about turning bullish too quickly. During a House Subcommittee hearing on September 18, Arkansas Representative French Hill accused the US Securities and Exchange Commission (SEC) of injecting politics into its regulatory approach, leading to confusion and uncertainty.
To determine whether traders are gaining confidence in the $62,000 support level, it is essential to analyze the Bitcoin futures funding rate. From September 18 to September 19, the funding rate remained stable at 0.005%, indicating a neutral market. While this is a significant shift from the negative rates observed on September 14, it suggests that retail traders are still hesitant to turn bullish on Bitcoin’s price.
Analyzing the demand in the BTC options market further supports this sentiment. The put-to-call volume ratio, which measures the balance between demand for put (sell) options and call (buy) options, fell to 0.54 on September 19. This indicates that call options outweighed put options by 86%, reflecting a reduced demand for downside protection. Ultimately, this suggests that traders are relatively comfortable with the $62,000 support level.
It is important to note that this article is for general information purposes only and should not be considered legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.