Bitcoin ended the week with strong bullish signals, as it managed to stay above the key support level it regained on Monday at $63,662. This price consolidation came as bulls targeted the top of the price channel at around $64,500, indicating positive expectations among investors regarding the currency’s future movements.
In the same context, Bitcoin exchange-traded funds witnessed huge cash inflows of $252 million last Friday, marking the seventh consecutive day of positive inflows, reflecting increased confidence in the market. However, the threat remains regarding what might happen if the US government decides to liquidate part of its Bitcoin holdings, especially in light of the uncertainty surrounding the current administration’s economic policy. This threat enhances the state of caution among investors. especially with most of the Bitcoin distributions from the Mt. Gox platform returning to creditors who seem to prefer to keep them for the time being.
This week comes loaded with the awaiting of the release of important economic data from US agencies. as investors hope that this data will support the Federal Reserve’s dovish approach regarding future interest rate cuts. The government, for its part, hopes that the US economy will be able to achieve a “soft landing” instead of the sharp contraction that some analysts are predicting.
On August 26, 2024, Bitcoin is facing a critical moment as prices hover around $63,908. Despite the attempts of the cryptocurrency to recover, it faces strong resistance between $64,000 and $65,000. The indicators recorded a recent peak at $64,500, followed by a sharp decline to $63,128 before prices stabilized above $63,500. This stability is an important sign of a short-term support level, but the analysis of trading volume indicates a weakness in the conviction of buyers, raising doubts about Bitcoin’s ability to maintain this upward trend.
Rate cut expectations push BTC above $64,000
The rise in Bitcoin prices, which exceeded the $64,000 barrier. is largely due to investor expectations regarding the possibility of a rate cut at the next monetary policy meeting of the Federal Reserve on September 17. Federal Reserve Chairman Jerome Powell confirmed in his speech at the Jackson Hole Forum that the central bank may consider adjusting its monetary policy, with clear hints towards easing.
Bitcoin ETFs saw significant net inflows of over $250 million, the highest since July, after Powell hinted at a possible rate cut. Trading volumes in these funds also rose to $3.12 billion, with BlackRock’s iShares Bitcoin Trust (iBIT) leading the trading activity with over $1.2 billion and $83 million in inflows.
Overall, U.S.-listed Bitcoin ETFs saw increased activity, driven by market optimism after the Fed chairman’s hints of monetary easing.
Analytically, Bitcoin is approaching critical resistance levels, with technical indicators suggesting that the bullish momentum is likely to continue in the near term. Over $500 million was pumped into ten ETFs tracking the spot price of Bitcoin over the past week. The positive performance was supported by slowing outflows from Grayscale’s GBTC fund. and continued inflows to rival funds, with BlackRock’s iBIT fund leading the way. US-based Bitcoin ETFs also posted their seventh straight day of net inflows. accumulating over $250 million on Friday, the highest since July 23. BlackRock’s iBIT fund topped the list with over $310 million in weekly inflows. while Fidelity’s FBTC fund came in second with around $88 million. With last week’s gains, FBTC appears to be on track to hit $10 billion in net inflows.
Bitcoin in August: Challenges, Recovery, and Upside Prospects
August was a tough month for Bitcoin (BTC), but the markets have started to recover, with the price now hovering above $63,000. If monthly closes continue at higher levels, it could pave the way for a gradual approach to the $70,000 target. As the month comes to a close, cryptocurrency investors may see a positive close after a challenging few day. Monthly closes typically lead to increased volatility, raising the potential for significant price action.
The question now is whether there is anything to support Bitcoin’s upside. The coin has been in a six-month consolidation period at its previous cycle high, the longest period it has taken to break an all-time high. In contrast, we have seen the fastest period of price reaching an all-time high before the halving in the cycle. All of these factors seem to be balancing each other, creating a sense of anticipation in the market.
Upcoming economic data, such as the Personal Expenditure Index (PCE) due out on August 30, will be of great importance. This indicator is one of the tools the Federal Reserve uses to measure inflation. and it could have a significant impact on market volatility at the end of the month. In addition, we will see NVIDIA’s earnings report on August 28, a leading indicator in the technology sector. If the personal spending data comes in at or below expectations, investors looking for a strong start to September may get what they want. On the mining front, mining difficulty is expected to rise by 2.8% this week. Although the influence of institutional investors on the market may reduce the strength of miners. there is expected to be less selling pressure. On the other hand, selling by short-term investors is witnessing significant strength, with the cost of this group reaching $63,600.
