Key Takeaways
What are the key positive drivers for a potential Bitcoin rally?
The decreasing global economic uncertainty, renewed interest from investors from Korea and optimism about a rate cut by the Fed.
Why are some investors still cautious?
Institutional purchasing has slowed and uncertainty remains about the Federal Reserve’s upcoming interest rate decision.
Bitcoin [BTC] shows signs of a positive global outlook as assets gradually build strength for a renewed rally.
However, there are still doubts in the market over whether to accumulate digital assets, despite improving macroeconomic sentiment.
Economic data points to a Bitcoin rally
According to the latest report from Alphractal, the Global Economic Policy Uncertainty Index is easing. A decline in this measure has often coincided with a positive market outlook, as venture capital returns to the market.
The chart above shows a comparison with the S&P 500, which typically moves in parallel with assets like Bitcoin.
Source: Alpharactal
Curvo shows that Bitcoin has returned 69.5%, while the S&P 500 only gained 10.1% – a trend also seen in previous cycles, suggesting that Bitcoin could outperform the S&P 500 if current conditions persist.
Korean investors appear to be at the forefront of the accumulation trend reflected in the Korean Premium Index, indicating renewed purchasing activity.
This follows a brief decline in interest; However, sentiment has since turned bullish and could continue in that direction.
Growth in sight, but investors remain cautious
Short-term Holder (STH) data, often used to identify Bitcoin’s compression or expansion phases, currently indicates expansion.
The STH-SOPR, when aligned with the Bollinger Bands, confirms that the price has moved past the middle band and is on an upward trend.
Historically, this has been a growth signal, suggesting that Bitcoin could be on track for significant price appreciation, with a near-term high of 1.02.
Source: CryptoQuant
However, it may take some time for the rally to materialize as institutional investors – typically the main drivers of Bitcoin demand – have slowed their purchases.
Data from Glassnode shows that daily purchases among these investors have fallen from an average of more than 2,500 BTC per day to less than 1,000 BTC, potentially impacting Bitcoin’s price trajectory.
Fed to the rescue?
Many investors remain on the sidelines as the Federal Reserve’s FOMC meeting approaches.
A recent AMBCrypto analysis shows that markets are largely expecting a 25 basis point rate cut – a move that could inject more capital into risky assets like Bitcoin.
Still, investors remain cautious and are limiting their exposure to Bitcoin in the short term, amid uncertainty over whether the Fed will take an aggressive or dovish stance.
Source: CoinGlass
Over the past two days, retail spot investors have sold approximately $56 million worth of BTC.
However, such muted sell-offs often indicate that investors are neither bearish nor pricing in major downside risks – a sentiment that on balance remains positive for Bitcoin.
Shawn Young, MEXC’s chief analyst, told AMBCrypto that investors are avoiding any clear directional bias amid an increasingly uncertain market environment.
“The muted institutional and private participation in Bitcoin, despite the widely expected Federal Reserve interest rate decision, signals increasing liquidity caution in today’s volatile macro landscape.”