Bitcoin Holding Gains

Despite the strength in USD and the rise in Fed tightening expectations, Bitcoin has shown good resilience on the back of the recent breakout move through $83k. Hawkish Fed expectations, and subsequent USD strength, sank BTC at several different times earlier in the year. However, the recent uptick in Fed tightening expectations has failed to drive a reversal in BTC. Indeed, with BTC ETF flows now net-positive on the year after a record surge last week, the prospect of a further rally in BTC looks strong. Indeed, the rally in Bitcoin comes despite some regulatory disappointment recently with the Clarity Act failing to pass the Senate.

Near-Term Drivers

With BTC remaining strong despite these developments, the question is, what would it take to stop BTC building a proper recovery higher here? It seems that BTC is perhaps once again being seen as a hedge against inflation and a means of decoupling from traditional market risks which was how it was originally seen and traded. This dynamic shifted somewhat as institutional flows entered the market but recent price action suggests these players are increasingly bullish and perhaps for these same reasons. Looking ahead, focus will be on Friday’s US jobs report. If further strength in the jobs market is seen and USD surges higher alongside a jump in Fed rate-hike expectations for October, this could cap the rally. However, if BTC remains strong through such an outcome, risks are surely pointed towards a stronger breakout to come.

Technical Views

BTC

For now, BTC is holding atop the $83,385 level. This remains the key near-term marker and while it holds as support, focus is on a fresh push higher with $94,730 the higher bull target to note. If we break back below the level, focus shifts towards a retest of support at $74,270.