Bitcoin Bulls Face Resistance Despite Positive U.S. Inflation Report: What’s Next for Crypto Markets?
Crypto markets experienced a rollercoaster ride on Thursday as bitcoin (BTC) failed to break through a key resistance level despite positive news on the U.S. inflation front. The downward trend that has been in place since early June continued, leaving investors on edge.
After the U.S. reported a drop in consumer prices for the first time in four years, markets reacted by increasing bets on a Federal Reserve rate cut. This led to a surge in higher-risk assets, including BTC. It seemed like bitcoin bulls were finally gaining ground as they approached the descending trendline that has been holding them back since June’s highs near $72,000.
However, hopes were quickly dashed as prices retreated from the resistance level, dropping below $57,000 early the next day. This latest setback, despite positive macroeconomic news, suggests that more price weakness could be on the horizon. A similar rejection at the trendline on July 1 led to a deeper sell-off.
But all is not lost for the bulls. The daily chart MACD histogram is showing signs of a potential bullish shift in momentum, with a crossover above zero looming. Additionally, the supply overhang from Germany’s Saxony state, which triggered a price drop earlier this month, is nearly exhausted. The uncertainty surrounding the liquidation of the 95,000 BTC held by Mt. Gox’s creditors adds another layer of complexity to the market dynamics.
FalconX, a crypto prime broker, remains optimistic about the medium- and long-term prospects for bitcoin. They point to the potential buying pressure from the $16.3 billion FTX repayment, the positive sentiment towards crypto from both political parties, and the possibility of an interest rate cut in September benefiting risk assets.
The potential selling by Mt. Gox’s creditors may have a different impact on the market compared to Saxony’s sales, according to FalconX. The distribution of funds could lead to more flow to exchanges rather than professional liquidity providers, or a more gradual sell-off over time.
As the crypto market continues to navigate through these uncertain times, investors will be closely watching for any signs of a bullish reversal in bitcoin’s price trajectory.