Bitcoin is stuck below $65,000, but there are several factors at play that are changing the market structure.

This week really broke the belt on several fronts. Federal Reserve Chairman Jerome Powell finally gave some in the market what they wanted by cutting rates by 50 basis points.

The S&P 500 is at another all-time high and gold continues to rally.

In response to the policy change and other factors, Bitcoin (BTC) broke through and strengthened to $64,133. Despite the confirmation of the long-awaited policy change from the Federal Reserve, Bitcoin’s daily price action has not yet deviated from its six-month baseline.

As mentioned last week, the Bitcoin chart shows a structurally aligned downtrend. On the higher timeframe, prices are hitting weekly lows, with futures-led liquidations driving the price action. Even the move to the range high from September 18 to September 20 is currently within the boundaries of a 6-month range.

At the time of writing, BTC price is seen breaking out of the resistance line at the previous (August 24) breakout high of $65,000, which also coincides with the 200-day moving average. If the weekly candle closes below this level, the weekly downtrend pattern is still in play.

The natural outcome of a breakout like the one we saw this week is for prices to retest the underlying support near the 20-day moving average (range $60,000-$58,500), especially if traders are unable to follow the current breakout with sustained spot volume. Spot volume has been relatively stable over the past six months, and most of the Bitcoin price action has been driven by futures liquidations and options market activity.

On the other hand, Bitcoin open interest has increased since this week’s FOMC, and if traders continue to attack the $64,000-$66,000 area, there is a possibility of a breakout of the downtrend channel and a change in Bitcoin’s upper time frame market structure.

As you can see in the chart above, BTC price has not been able to break the downtrend line of the channel since April 24, and to do so, a bullish move would need to close above $66,300.

relevant: Bitcoin liquidations alone won’t be enough to break the $70,000+ highs. Here’s why:

JJ, head of crypto options and derivatives at HighStrike, hinted that there could be “massive short liquidity and short call gamma” if Bitcoin price breaks above the 200-DMA ($64,000), but the analyst said it would first require Coinbase “sellers to kindly remove their walls.”

Traders also noted that the Fed’s rate cut coincided with the start of the fourth quarter, and that the Securities and Exchange Commission approved options on BlackRock’s spot Bitcoin ETF on September 20.

The listing of options on BTC ETFs is a more important milestone than you might think.

Derivatives are the foundation of functional markets, and Bitcoin and digital assets have a long way to go to catch up with traditional markets. Enter the world’s largest capital market: https://t.co/tpuVPVmJCA

— Kelly Greer (@kellyjgreer) August 15, 2024

According to Charles Edwards, founder of Capriole Investments:

“Q3 is the worst time to invest in Bitcoin. Q4 is the best time.”