Bitcoin finds itself in an unprecedentedly bullish macro setup, with institutional players showing strong interest. However, this bullish environment comes with a caveat: the broader financial market, particularly the S&P 500, has shown strong bullish movement as Bitcoin remained flat in its current range. If the broader markets fail to see bullish continuation and break down, there could be significant impact on Bitcoin's ability to sustain this region and will likely fall along with it as uncertainty mounts.
One key factor to watch, according to Kellam, is the upcoming Federal Open Market Committee (FOMC) meeting in mid-September. The anticipated decision on interest rate cuts could set the stage for dramatic shifts in the financial markets. Kellam outlines the possible scenario of a Bullish surge in markets followed by a large pull back flushing liquidity in both directions before it can find an bullish continuation as traders react to the uncertainty in the broader economy. This delicate balance between bullish momentum and bearish risks leaves investors in a precarious position.
Another major trend is the institutional appetite for Bitcoin. Kellam notes that in Q1 and Q2 of this year, institutional investments in Bitcoin reached record levels. However, despite this initial influx of capital, Bitcoin has remained relatively flat with a slight bearish bias since March, 2024, consolidating regionally at previous all-time highs. At the same time, retail investors are under pressure, with credit card delinquencies and debt levels at record highs, limiting liquidity in the market. Kellam stresses that this lack of retail participation could open opportunities for savvy institutional players to manipulate market movements, trapping both bullish and bearish traders.
Looking ahead, Kellam warns investors to brace for a period of heightened volatility. The market is primed for significant swings in both directions considering the geopolitical tensions, the upcoming U.S. election cycle, and the historic sideways chop 160+ days post Bitcoin halving. However, the global liquidity cycle does suggest a likely surge in liquidity coming in the near future. There is an emphasis on patience and Kellam advises traders to watch key support levels, particularly the $50k level and if lost, the $42k level. As the market continues to consolidate, the question remains: will Bitcoin break out to new highs, or will it face a deeper correction before its next bullish leg? The video above outlines the charts he is watching and what investors and traders should be paying attention to.