Are you having a good Chuseok holiday? Although I started the weekly briefing with a question, it seems that investors with positions are having a hard time. Bitcoin, which raised concerns about a new low in last week's weekly briefing , has been rebounding sharply throughout the week. In addition, since last weekend, when the holiday began, it has surged more than 4% and then given back all of its gains, making it even more difficult to predict the price.
Bitcoin has seen a gain of over 10% over the past week. The gains were particularly notable between the 12th (local time), when talk of the Federal Reserve cutting interest rates by 0.5%p at its September FOMC meeting, known as the “big cut,” and the 14th, the start of the weekend.
The reason for the high increase is that fears of a resurgence in U.S. consumer prices and a decline in asset prices, which were cited as concerns over a sharp interest rate cut until the beginning of the week, have largely dissipated.
What is interesting is that Bitcoin, which showed a high price increase by breaking through the $60,000 mark again, is showing a movement to give up the gains again after the weekend. In particular , it seems to be lagging behind the growth rate of the risky asset leader Nvidia (NVDA), as well as safe assets such as gold and the Standard & Poor's 500 (S&P500).
“Bitcoin needs to surpass $61,700 for further increase”
When you look at various data, Bitcoin's situation has not deteriorated significantly. The market capitalization of stablecoins, which are putting upward pressure on Bitcoin, recently exceeded $170 billion . This is the highest level since 2022, when TerraUSD (UST), which had risen to second place in market capitalization, plummeted to a level close to 0 won.
The fact that there are now over 1,000 institutional investors investing in Bitcoin spot exchange-traded funds (ETFs) listed on the U.S. market is also positive news for the Bitcoin price, as it is evidence of continued interest from institutional investors in Bitcoin ETFs.
MicroStrategy, Inc., the largest individual U.S. company holding the largest amount of Bitcoin, recently announced that it converted $1.1 billion worth of its stock into 18,300 Bitcoins . The company currently holds a total of 244,800 Bitcoins.
That’s close to 1.24% of the total Bitcoin supply. The number of companies like MicroStrategy that want to hold Bitcoin as an asset is likely to continue to grow.
There are also some who point out that the overall supply and demand conditions are more important to the price now. Since there are no problems with the various conditions surrounding Bitcoin, the price will naturally rise if the supply and demand improves. The BeinCrypto Market Analysis Team recently presented an analysis that Bitcoin must first surpass the $61,700 mark to continue its further rise .
0.25%p or 0.5%p... What will the Fed choose to cut interest rates?
The most important event of the week is the announcement of the US benchmark interest rate for September. The US Federal Reserve will hold its Open Market Committee (FOMC) meeting at 3:00 a.m. on Thursday the 19th, decide on the interest rate, and then hold a press conference.
First, the interest rate cut is certain, and attention is focused on how much the cut will be. Last week, the market was buoyed when Nick Timiraos, a Wall Street Journal reporter known as the “Fed’s mouthpiece,” predicted that the Fed would cut rates by 0.5%p at the September FOMC meeting.
The key is whether the actual interest rate decision will be a 0.5%p cut. As of 9 p.m. on the 16th, U.S. futures investors are predicting a 63% chance of a 0.5%p cut. In this situation, if the Fed only raises by 0.25%p, the Bitcoin price will naturally be adjusted.
In addition to the rate cut, the timing of when the Fed will stop its ongoing quantitative tightening is also considered a factor that will cause great volatility in asset prices. If it is mentioned that the Fed may bring forward the timing of quantitative tightening, the Bitcoin price may rise by one more level. If it naturally surpasses the $61,700 level, the rise to the next hurdle of $65,000 will be much easier.
Of course, until the early hours of Thursday when the interest rate decision is made, not only Bitcoin but also all asset classes are expected to show significant volatility. In such a difficult market, taking a break from trading for a while may be one way to go. Then, I hope that our readers will have successful investments this week.
