Bitcoin Surges to a Two-Month High Above $65,000

Bitcoin surged above $65,000 reaching levels not seen in nearly two months with market sentiment turning bullish.

Bitcoin (BTC) surged past the $65,500 mark on Thursday morning in the U.S., reaching levels not seen in nearly two months with traders beginning to feel bullish once again.

Source: BNC Bitcoin Liquid Index

The rally in Bitcoin started last week after the U.S. Federal Reserve implemented its first interest rate cut since the COVID-19 pandemic, reducing rates by 50 basis points—double the expected 25 basis point cut. Traders are now speculating that another 50 basis point cut will follow at the Fed’s upcoming meeting on November 7, as indicated by the CME FedWatch Tool.

Bitcoin’s price surge has also reignited interest in U.S.-based spot Bitcoin ETFs. BlackRock’s iShares Bitcoin Trust (IBIT) saw significant inflows on Wednesday, with investors adding nearly $185 million to the fund, following an influx of $98.9 million the previous day. This uptick comes after weeks of flat or negative inflows, coinciding with Bitcoin’s earlier price struggles.

The broader market also reacted to economic developments in China, where reports suggest that authorities are considering injecting up to 1 trillion yuan ($142 billion) into the country’s largest state banks to stimulate the faltering economy. The Shanghai Composite Index jumped 3.6% on Thursday, setting it on course for its best week in a decade. European and U.S. markets also saw gains, though U.S. stocks pulled back slightly from their highs earlier in the day.

China’s move followed a decision by the People’s Bank of China (PBOC) earlier this week to lower the reserve requirement ratio for mainland banks by 50 basis points and reduce the seven-day reverse repo rate by 20 basis points to 1.5%.

September Accumulation

Over the past 30 days, the Bitcoin (BTC) ecosystem has experienced a notable surge in accumulation, with around 88,000 BTC being acquired on a net basis. This strong accumulation, sustained throughout much of September, is approximately seven times the monthly issuance of Bitcoin, which stands at about 13,500 BTC. This level of intense buying has not been seen since Q4 2023, a period marked by a rapid increase in Bitcoin’s price, according to on-chain analysts, Glassnode.

A closer look at this net accumulation shows that retail investors, particularly smaller holders, are driving much of the activity. Investors with less than 10 BTC, commonly referred to as “crabs” (holding 1 to 10 BTC) and “shrimps” (holding less than 1 BTC), have collectively accumulated 35,000 BTC in the past month. This trend of retail accumulation, ongoing since May, highlights the increasing confidence and participation of smaller investors in the market.

A significant outflow of Bitcoin from exchanges is providing further support for Bitcoin’s price. Over the past 30 days, around 40,000 BTC have been withdrawn from exchanges, reducing liquidity. When bitcoin is moved off exchanges, it often suggests that holders intend to keep it for the long term, reducing selling pressure. With 74% of the circulating supply considered illiquid, this creates a bullish environment for potential future price increases. The combination of retail accumulation and reduced exchange liquidity signals that Bitcoin’s upward momentum could continue to build in the months ahead.

While September is traditionally one of the most bearish months for Bitcoin, this year is bucking the trend. With just days remaining until the end of the month, Bitcoin is up 9.34% this month, its best September on record, and a good sign of growing momentum going into Q4.

Source: X

A Gamma Squeeze?

The U.S. Securities and Exchange Commission (SEC) approved the listing of physically settled options tied to BlackRock’s spot Bitcoin (BTC) ETF, the iShares Bitcoin Trust (IBIT). While the IBIT options still require approval from the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC), there is a consensus that this could attract more institutional investors to the crypto market. However, the crypto community is divided on how this move might impact Bitcoin market volatility. According to Bitwise Asset Management, a gamma squeeze—a rapid price rally driven by options market dynamics—could become a significant factor in the Bitcoin market once IBIT options launch.

Bitcoin has been incorrectly labeled as a “risk-on” asset, according to Robbie Mitchnick, BlackRock’s head of digital assets. In a Sept. 24 interview with Bloomberg, Mitchnick explained, “There’s been a bit of an own goal within the crypto industry. Some research publications and daily commentaries have taken Bitcoin’s inherent risk and wrongly classified it as a risk-on asset, assuming it should behave like equities.” He emphasized that Bitcoin’s long-term drivers are fundamentally different from those influencing equities and other risk assets. “In some cases, the drivers of Bitcoin may even be inverted compared to equities,” he said.

In BlackRock’s recent Bitcoin paper, the asset manager described Bitcoin as a “unique diversifier,” highlighting its potential as a hedge against monetary and geopolitical risks. Mitchnick added, “When we think of Bitcoin, we primarily view it as an emerging global money alternative. It’s a scarce, decentralized, non-sovereign asset that carries no country-specific or traditional counterparty risk.”

The paper discussed Bitcoin’s price performance during various geopolitical events reflecting its emerging role as a global hedge. The report highlights major events like the COVID outbreak, the U.S.-Iran escalation, and the 2022 Russia-Ukraine war, showing how Bitcoin has frequently outperformed traditional risk assets during such periods.

Even when traditional markets, including equities, suffer, Bitcoin has demonstrated resilience and recovery. For instance, the August 2024 sell-off saw Bitcoin’s recovery outperform both gold and the S&P 500 in the aftermath of the Yen Carry Trade unwinding.

Source: BlackRock