Bitcoin Price Surges as Markets Respond to Fed's Dovish Signals and Rising Accumulation by Long-Term Holders

Bitcoin (BTC) has seen a notable price jump of 4% over the last 24 hours, reaching a high of over $86,000 on March 20. At its intraday peak, the cryptocurrency briefly touched $87,470, signaling some profit-taking by traders but also reflecting continued bullish sentiment in the market. Several key factors have driven Bitcoin’s rise, with the Federal Reserve’s dovish stance and increasing accumulation among long-term holders playing a significant role.

Bitcoin Reacts to Dovish Federal Reserve Signals

The latest surge in Bitcoin’s price coincides with the Federal Reserve’s latest actions and signals, which have fueled optimism across risk assets, including Bitcoin. On March 19, the Federal Open Market Committee (FOMC) announced it would keep the benchmark interest rate steady while suggesting that it might cut rates twice later this year. This dovish stance has reassured investors, alleviating fears of prolonged monetary tightening that could stifle economic growth.

A key takeaway from Federal Reserve Chair Jerome Powell’s remarks was his measured tone on the risk of a recession, indicating that the likelihood of a recession was "not high." This sentiment, combined with the Fed's decision to trim its growth forecast, further fueled a bond rally and enhanced expectations for lower borrowing costs in the future.

Lower interest rates are often seen as a positive for risk assets like Bitcoin, as they reduce the opportunity cost of holding non-yielding investments. As a result, investor appetite for Bitcoin has increased, pushing its price higher.

Rising Accumulation Among Long-Term Bitcoin Holders

Alongside the broader market reaction to the Fed's signals, a significant factor driving Bitcoin’s price rise is the ongoing accumulation of Bitcoin by long-term holders (LTHs). These are entities that have held their Bitcoin for more than 155 days, and they are increasingly holding onto their assets rather than selling.

Key indicators show a growing willingness among LTHs to accumulate, as evidenced by a slowdown in the Binary Spending Indicator, which tracks LTH spending activity. This shift suggests that long-term holders are becoming less inclined to sell, reducing sell-side pressure on the market. In fact, LTH supply has been steadily rising, signaling that more holders are choosing to retain their Bitcoin rather than liquidate it.

Although there was a brief spike in LTH distribution during Bitcoin's recent drop to four-month lows, it was short-lived. Typically, during bull markets, LTHs balance their sell-side activity with new demand, and this cycle has absorbed a similar volume of LTH profits as previous bullish cycles. According to Glassnode analysts, this may indicate that LTHs have largely completed their sell-side activity within the current price range, contributing to the sustained upward momentum in Bitcoin’s price.

Bitcoin Bounces from Key Technical Support Levels

Bitcoin’s recent price surge also follows a technical bounce from the lower trendline of its ascending channel pattern, which has been in place since March 9. The cryptocurrency has tested this lower trendline multiple times in recent weeks, and each time, it has bounced upward, reinforcing the pattern’s validity.

The latest test of the channel’s lower boundary on March 18 preceded a 7.60% gain, similar to previous bounce scenarios that saw gains of 7.50% and 6.60%. As of March 20, Bitcoin is facing resistance near the upper boundary of the channel, aligning with the 200-4H exponential moving average (EMA) around $87,830.

If Bitcoin experiences a pullback, it could first test the 50-4H EMA around $83,900. A deeper correction may bring Bitcoin down to the channel’s lower boundary, with support near $82,400, which acted as support during March 16–17.

Conclusion: A Strong Foundation for Bitcoin’s Upward Momentum

Bitcoin's 4% price jump today reflects a combination of bullish market sentiment, driven by the Federal Reserve’s dovish signals and increasing accumulation by long-term holders. With a growing willingness among LTHs to hold rather than sell, the supply-side pressure on Bitcoin remains relatively muted. Additionally, the cryptocurrency’s technical setup within its ascending channel further supports the possibility of continued upward momentum.

As Bitcoin continues to rise, traders and investors will be closely watching for further signals from the Federal Reserve and long-term holders, which could play pivotal roles in shaping Bitcoin's next moves. If broader market conditions remain favorable, Bitcoin may continue to see price appreciation, potentially testing new resistance levels in the coming days.