Thursday was a significant day for the crypto market as bitcoin (BTC) struggled to break through a key resistance level despite positive U.S. inflation data. This has led to a continuation of the downward trend that has been observed since early June.
After the U.S. reported a decrease in consumer prices for the first time in four years, market expectations for a Federal Reserve rate cut increased. This led to a rise in higher-risk assets, including BTC. Although there was hope that bitcoin bulls would be able to break above the descending trendline that has characterized the sell-off since June, prices eventually turned lower, dropping below $57,000.
The failure of the bulls to push through the resistance level, despite positive macro news, suggests that there may be further price weakness ahead. However, there are some positive signs for the bulls. The daily chart MACD histogram is showing signs of a potential bullish shift in momentum, with a crossover above zero on the horizon.
Additionally, the supply overhang from Germany’s Saxony state, which triggered the recent price drop, is nearly exhausted. There is also uncertainty surrounding the liquidation of the 95,000 BTC set to be distributed to Mt. Gox’s creditors, which could impact the market.
Furthermore, there are factors that could provide support for BTC prices in the near future. The potential repayment of $16.3 billion by FTX over the coming months could create buying pressure. Additionally, the positive sentiment towards crypto from both sides of the aisle and the possibility of an interest rate cut in September could benefit risk assets and bolster the confidence of medium- and long-term bulls.
It is important to note that potential selling by Mt. Gox’s creditors may have a different impact on the market compared to Saxony’s sales. The distribution of funds may vary, with more flow potentially going to exchanges rather than professional liquidity providers.
In conclusion, while bitcoin’s bullish momentum faltered after failing to break through a key resistance level, there are reasons for optimism in the market. The exhaustion of the supply overhang from Germany’s Saxony state, coupled with potential positive developments such as the FTX repayments and interest rate cuts, could provide support for BTC prices in the future.