The Bitcoin price is trading near its highest levels in a month following back-to-back dovish updates from central banks in the United States and Japan.
Bank of Japan keeps interest rates steady
On Sept. 20, the BitcoinBTC$62,893price rose by circa 2.5% to over $64,120, coinciding with the Bank of Japan’s decision to keep its interest rates steady after August’s hike.
BTC
$62,893
BTC/USD daily price chart. Source: TradingView
The judgment contrasts with the USFederal Reserve’s 50 basis points (bps) rate cuton Wednesday, Sept. 18, thus reducing the risks associated with the unwinding of “yen carry trades” that crashed the Bitcoin price by almost 25% in August.
In other words, investors see no immediate risk of rising borrowing costs in Japan, meaning they can borrow the Japanese yen cheaply and hold their positions in higher-yielding assets like Bitcoin.
Source:Michaël van de Poppe
Moreover, the Federal Reserve’s 50 bps rate cut encourages the continuation of speculative investments as interest rates on safer assets remain unattractive.
Overall, this helps the Bitcoin price as investors feel more confident in maintaining or increasing their exposure to high-yield assets.
Bitcoin’s OI, funding rates hit monthly highs
Bitcoin’s price rise today is further accompanied by a strong rise in the open interest (OI) and funding rates in its futures market.
As of Sept. 20, the total number of unsettled Bitcoin futures contracts was around $34.39 billion, its highest since Aug. 26. Meanwhile, its funding rates were around 0.189% per week despite having slipped into negative territory earlier in the month.
Bitcoin futures open interest, funding rate performance chart. Source: CoinGlass
When open interest rises, more capital flows into the market, which often corresponds with expectations of significant price movements. This implies that traders are actively positioning themselves in the market, potentially anticipating further price increases.
The fact that funding rates have shifted from negative territory earlier in the month to positive territory now suggests a shift in sentiment toward a more bullish outlook.
That means more traders expect Bitcoin’s price to continue rising and will pay the funding cost to hold their long positions.
Bitcoin nears bull flag breakout
Bitcoin’s gains today are part of a rebound that started last week when it tested the lower trendline of its prevailing bull flag trend.
BTC/USD three-day price chart. Source: TradingView
The price is now heading toward the flag’s upper trendline at around $65,500, eyeing a breakout toward $78,400. As a rule, the upside target for a bull flag is measured after adding the breakout point to the height of the previous uptrend.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
