Bitcoin Bullish as Market Sentiment and Indicators Signal Breakout

Bitcoin's (BTC) price has held onto its gains from the weekend, after rising 10% last week and closing above US$64,000. BTC price rallied on Saturday morning, driven by Federal Reserve (Fed) Chairman Jerome Powell’s confirmation that an interest-rate cut in the U.S. is coming in September.

The Fed expected to cut rates at the September meeting; Powell says the timing, and pace of rate cuts depends on data but admits the "times has come".

This positive market sentiment led U.S. spot Bitcoin ETFs to register net inflows of more than US$500 million last week. In contrast, on-chain and Bitcoin futures market positive funding rates suggest a bullish outlook.

Miners Position Index (MPI), the ratio of miners' outflows in USD divided by the 365-day moving average, presents a bullish price outlook for Bitcoin. When reviewing this metric, if the metric increases, miners become more active in selling, increasing the selling pressure, and creating a headwind effect for the price of Bitcoin. On the contrary, a decrease in the index suggests miners are becoming less involved in selling, creating a tailwind effect. In BTC's case, the metric decreases from -0.63 to -1.46 from Friday to Monday, suggesting less selling pressure.

Funding rates, an increasingly key metric when gauging market sentiment, are also positive for Bitcoin's price outlook. Funding rates represent traders' sentiments in the perpetual swaps market and are proportional to the number of contracts. Positive funding rates indicate that long-position traders are dominant, while negative funding rates indicate that short-position traders are dominant and are willing to pay long traders. As for BTC's case, the funding rates are positive and stand at 0.008, reflecting bullish sentiment and buyer dominance.

Bitcoin price broke above its resistance level, the 200-day (EMA) at US$62,280 and its 61.8% Fibonacci retracement level (drawn from the high on July 29 to the low on August 5) at US$62,042 on Friday. At the time of writing on Monday, it is slightly down 0.3% at $64,021. If the 200-day EMA at $62,280 holds as support and BTC closes above the US$65,596 level, it could rally 7% to retest its July 29 high of US$70,079.

Given the backdrop of increasing global liquidity, interest rate cuts around the corner, a recent reset in Bitcoin market sentiment, and technical/on-chain indicators signalling bullish, the crypto market is set up to test a breakout of its current consolidation range.