Local buying drives BTC rally as market awaits Fed rate cut – Bitfinex

While bitcoin (BTC) is facing local resistance levels, the crypto asset is experiencing a rally driven by aggressive spot market activity.

According to a report from Bitfinex Alpha, on-chain metrics suggest that bitcoin’s momentum is currently bullish. This outlook is also bolstered by increased inflows into local U.S. Bitcoin exchange-traded funds (ETFs), indicating growing confidence among retail and institutional investors.

Spot activity drives bullish momentum

Bitcoin’s bullish momentum is seen in Spot Cumulative Volume Delta (CVD) data. This metric measures the net volume of spot market orders across exchanges by subtracting the volume of sell orders from buy orders. The asset’s spot CVD has pushed its price higher since falling below $53,000 in early September.

Analysts said the CVD for the stable-margin perpetual and coin-margin markets has also recovered; however, their movements have been minimal, indicating that bitcoin’s ongoing recovery has been driven by spot activity rather than by participants in perpetual or futures markets.

“This type of buying behavior is typically seen as a more sustainable basis for price increases, as it reflects a direct commitment of capital to the asset rather than speculative bets based on leverage,” Bitfinex said.

BTC at resistance level

The price surge has taken BTC to the $60,500-$61,000 resistance level, which analysts say is a cause for concern. This level has played an important role throughout the market’s price movement since early March.

Another cause for concern is how spot CVD has remained flat while boosting the price of bitcoin; Bitfinex said this metric could be halted if there is a risk reduction event before or after this week’s highly anticipated Federal Open Market Committee (FOMC) meeting.

Historical data shows that stocks and risk assets often see a sell-off in lower timeframes after the Fed announces a rate cut; however, Bitfinex stated that this pattern is not an infallible predictor of future trends.

Currently, the crypto market is poised for potential volatility based on investor expectations of upcoming rate cuts. Whether the Fed implements a 25 basis point or 50 basis point cut, Bitfinex said market behavior could swing between cautious risk-off and bullish momentum.

Meanwhile, total Bitcoin open interest across all perpetual trading pairs is up roughly 14% since BTC fell below $53,000, and funding rates have moved from extremely negative to neutral.

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