Bitcoin recently moved to above $60,000 on Friday, sticking around that level until late Sunday afternoon when it dipped slightly to just below $59,000. Despite the slight retracement, it’s still a healthy gain of over 6% compared to a week ago. But what’s driving this recent uptick? Let’s break it down.
Big Inflows into Bitcoin ETFs Fuel the Rally
One of the key reasons behind Bitcoin’s latest price boost is the massive inflow of funds into U.S. Bitcoin ETFs (Exchange Traded Funds). On Friday alone, more than $263 million flowed into these funds, marking the largest single-day inflow since July 22.
Fidelity’s Bitcoin ETF saw an impressive $102 million in new investments, pushing the fund’s growth to $218 million in just one week. This was a welcome recovery after two weeks of losses. Other Bitcoin ETFs, such as those from ARK Invest and Bitwise, also enjoyed substantial inflows.
Why Is Bitcoin Climbing Now?
So, why is Bitcoin on the rise at this moment? One possible reason is the growing expectation that the U.S. Federal Reserve (Fed) might soon lower interest rates.
Many investors are speculating on a rate cut between 25 to 50 basis points. Lower interest rates tend to make riskier assets like Bitcoin more appealing because they can drive more investment into markets like crypto.
Recent inflation data showing a 2.5% rate—lower than expected and close to the Fed’s 2% target—has fueled these expectations. Additionally, central banks worldwide, including the European Central Bank and the Bank of Canada, have also eased up by lowering their rates recently.
Bitcoin to $100,000 Next? Spotting the Cup and Handle Pattern
As we take a fresh look at Bitcoin’s price action, an interesting pattern is starting to form: the Cup and Handle. This pattern has caught the eye of many, including analyst Jelle, who shared it on Twitter. If this pattern unfolds as expected, we could be looking at a big move up, possibly targeting the $100,000 level.
This cup & handle pattern has been forming for nearly 3 years.
It has a target in the 6-figure range.
With Q4 right around the corner, I don't think it'll be much longer before it starts playing out.
You ready?#Bitcoin pic.twitter.com/l4FeVXRNYW
— Jelle (@CryptoJelleNL) September 13, 2024
The Cup and Handle is a classic pattern in technical analysis, often used to spot potential price reversals. Shaped like a cup with a small handle, it typically signals a bullish trend.
Here’s how the pattern works:
- The cup forms first, looking like a U-shape. It starts with a decline, hits a bottom, and then begins to rise. For the pattern to hold weight, the cup should be as deep as it is wide.
- The handle appears next, showing a brief sideways or slightly downward movement, resembling a small handle attached to the cup.
The Cup and Handle pattern is usually seen as a sign that prices could go higher. During the cup formation, investors have a chance to accumulate Bitcoin at lower prices, creating a strong base for an upward push. The handle then represents a brief pause before the next move up. If Bitcoin manages to break out above this handle, it could trigger a buy signal, suggesting that demand is outpacing supply.
With the $100,000 level potentially within reach, this is definitely a pattern to keep an eye on. We’ll have to see if it sets the stage for Bitcoin’s next big move.
So… Is the Bull Run About to Kick Off Again?
Even though Bitcoin’s recent rise looks promising, we shouldn’t get ahead of ourselves. Some experts are cautious, noting that a large rate cut of 50 basis points could actually signal economic concerns, which might lead investors to pull back from riskier assets like Bitcoin.
Plus, September hasn’t been a great month for Bitcoin historically, with more red days than green over the past 13 years.
For now, it is important for Bitcoin to be holding its ground above $60,000, and for that it will have to claw back a bit today. Whether this is the start of the next leg of the bull run or just a short-lived boost remains to be seen.
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