Following the “dovish” minutes released by the US Federal Reserve on August 21, the open interest in bitcoin has increased by over a billion dollars.
Within hours of the US Federal Reserve releasing its July meeting minutes—some believe provide additional evidence of a September rate cut—bitcoin futures traders added more than $1 billion to the market’s Open Interest (OI).
On August 22, the interest in Bitcoin futures increased to $31.92 billion, up $1.26 billion over the previous day.
OI is the total quantity of unresolved derivative contracts, like futures and options. An increase in OI suggests that traders are more confident in their ability to forecast the direction of Bitcoin’s price, either upward or downward.
Data indicates that the cohort is somewhat divided on whether the price of Bitcoin (BTC$60,781) will increase or decrease.
According to CoinGlass data, bullish traders had a marginal lead throughout the 12 hours with 50.63% of total future positions, compared to 49.37% for shorts.
According to CoinMarketCap data, the price of bitcoin is currently trading at $60,623, a level it has been trading at since August 9.
In a report published on August 22, 10x Research head of research Markus Thielen stated that the Fed’s minutes “make a rate cut in September almost a certainty.”
According to Thielen, the “vast majority” of FOMC members favoured a rate cut in September, and some even thought that a decrease in July might be possible.
Bitcoin is poised to rise even further. The FED minutes were published a few hours ago, and they were pretty dovish, according to anonymous cryptocurrency dealer Sykodelic.
Investors generally shift from secure assets like bonds and term deposits to assets that are thought to be riskier, like Bitcoin, when interest rates decline.
Crypto analyst Nishant Bhardwaj said, “Get ready for one of the most explosive Q4s in history, for US and Indian markets,” citing the Fed’s “imminent” interest rate reduction.
“This dovish outlook is expected to be reinforced by Powell’s upcoming Friday speech, which is likely to boost risk assets like stocks and Bitcoin as the monetary policy provides a favourable backdrop,” Thielen said.
Justin Elliot, the portfolio manager at Caldwell Investment Management, stated on August 15 that the Fed’s anticipated “level of aggression” in rate-cutting is unfounded.