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Arslan Butt
Author
Arslan Butt
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
Bitcoin (BTC), the world’s oldest and most valuable cryptocurrency, initially surged to $59,800 but struggled to maintain that level, eventually falling below $56,630.
The global cryptocurrency market cap is $2.06 trillion, reflecting a 24-hour decline of 0.93 percent. Bitcoin’s recent pullback to the $58,000 range followed the release of US Consumer Price Index (CPI) data, which revealed a price rebound in July as expected.
This development has dampened expectations for a significant rate cut by the Federal Reserve in the upcoming month.
Additionally, ongoing geopolitical tensions between Iran and Israel have added further pressure to the market. The crypto derivatives sector also experienced substantial liquidations over the past day, contributing to the overall market volatility.
It is worth noting that institutional interest in Bitcoin may be waning at its current price, according to a crypto analyst.
The 7-day minting ratio, which tracks the creation of new stablecoins and their conversion into crypto, has dropped significantly from $2.7 billion earlier in August to $1.4 billion now.
This decline suggests that institutions, which had been actively investing when Bitcoin fell below $55,000, are now less interested. Currently, Bitcoin is trading around $58,149, showing a slight drop in the past 24 hours.
Additionally, the Crypto Fear & Greed Index has fallen to a “Fear” level of 27, indicating market caution.
Despite this, some forecasts suggest Bitcoin’s bull run could continue into 2025, based on past cycles.
Thus, the decline in institutional interest and the Crypto Fear & Greed Index’s drop to the “Fear” level suggest caution, putting downward pressure on Bitcoin’s price.
However, some forecasts still predict a continued bull run into 2025.
On the US front, the US dollar has struggled to gain strength because markets are expecting a 25 basis point rate cut at the Federal Reserve’s September meeting.
This expectation has led to a slight drop in US Treasury bond yields, limiting the dollar’s recent gains despite strong economic data, such as better-than-expected July retail sales and a resilient labor market.
Federal Reserve officials have hinted that a rate cut might be necessary due to easing inflation and shifting economic conditions.
On the data front, the US Census Bureau reported a 1% increase in retail sales for July, surpassing expectations of a 0.3% rise. Excluding autos, sales were up 0.4%, exceeding the anticipated 0.1% gain.
Additionally, the US Department of Labor (DOL) disclosed that initial jobless claims for the week ending August 10 totaled 227,000, better than the expected 235,000 and the previous week’s 234,000.
These stronger-than-expected figures underscore the resilience of the US economy and reinforce the view that the labor market remains robust.
Therefore, the anticipated Fed rate cut and weaker dollar could boost Bitcoin’s appeal as an alternative investment.
Strong US economic data might support market confidence, but the expectation of lower interest rates could enhance Bitcoin’s attractiveness compared to traditional assets.
Daily Technical Outlook: Bitcoin (BTC/USD)
Bitcoin ($BTC) is currently trading at $58,770, showing a slight increase of 0.07% on the 4-hour chart. Technically, Bitcoin is in a precarious position after violating the triple bottom pattern around the $57,750 level.
This pattern previously offered strong support, but its breach, coupled with the formation of a bearish engulfing candlestick, suggests that the downtrend may continue.
Immediate resistance is now at $59,810, followed by $61,870 and $64,640. On the downside, Bitcoin has immediate support at $55,200, with further support levels at $52,690 and $50,700.
The 50-day Exponential Moving Average (EMA) at $59,650 is also exerting downward pressure, acting as a resistance point.
The Relative Strength Index (RSI) stands at 44, indicating that there’s still room for further selling before Bitcoin enters oversold territory.
In conclusion, the outlook remains bearish below $57,750. However, if Bitcoin manages to break above this level, we could see a shift towards a more bullish trend. Keep an eye on the $57,750 level.
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