On Friday (July 12), Bitcoin fell below $57,000 in the short term. The U.S. House of Representatives failed to overturn President Biden's veto of SAB 121, a bill aimed at allowing banks to provide cryptocurrency custody services. The German government wallet address transferred another 5,000 bitcoins, leaving 4,925 bitcoins in its final position.

The U.S. House of Representatives voted on whether to overturn President Biden's veto of the SAB 121 resolution, but failed to pass, and the SEC's cryptocurrency accounting policy remains unchanged. Rep. Maxine Waters, one of the core Democratic negotiators on cryptocurrency legislation, said the SEC and the banking industry are negotiating on changing controversial accounting policies.

It is reported that SAB 121, which was first issued in 2022, has caused controversy over the past year. It requires cryptocurrency custodians to record customer-held cryptocurrencies as liabilities on their balance sheets, and the crypto industry is concerned that this move may prevent banks from protecting digital assets.

Arkham tweeted that the German government has just sent another 5,000 bitcoins worth $286.44 million to Flow Traders, Coinbase, Kraken, Bitstamp, and addresses starting with 139Po and bc1qu.

At present, they have transferred a total of 10,627 bitcoins worth $615.33 million to market makers and exchanges. The German government currently holds only 4,925 bitcoins worth $282.45 million.

The market generally expects that the German government's massive sell-off will end this weekend, which means that short-term negative factors still exist. In addition, after the former largest cryptocurrency exchange Mt.Gox repaid its creditors, it is still uncertain whether early investors will choose to exit their positions. Therefore, trading should be cautious.

The U.S. Consumer Price Index (CPI) rose 3.0% year-on-year in June, slightly lower than the market expectation of 3.1%. Analysts said that the CPI data is good for Bitcoin, but traders questioned why the price of Bitcoin is still below $58,000. CoinTelegraph pointed out that there may be three reasons for the lack of enthusiasm among investors, namely the German government's selling wave, miners' profitability, and recession concerns.

In addition to the aforementioned German government sell-off, another source of uncertainty comes from Bitcoin miners. The halving in April resulted in a 50% reduction in block subsidies, which forced some miners to sell their Bitcoin holdings. According to a report by CryptoQuant, large miners have sold about $300 million since June 20, while medium-sized miners have sold about $500 million at cost price.

Finally, traders are concerned that a weak housing market will hamper global economic growth. If corporate earnings disappoint in the second half of 2024, investors may seek protection in cash positions, which is negative for risk assets, including Bitcoin. These combined factors explain why Bitcoin has failed to reclaim the $60,000 support level despite a favorable macroeconomic environment.

Daan Crypto, a well-known trader and cryptocurrency analyst, said that Bitcoin's weakness can be attributed to market makers trying to liquidate leveraged longs. However, the trend is in favor of "continued higher", which means that Bitcoin should rebound to $60,000 in the short term. Essentially, if the Fed cuts interest rates, the incentive for fixed income investment will decrease, and some of this money will seek higher returns elsewhere.

Chris Larkin, managing director of trading and investing at E-Trade, told CNBC that the Fed is one step closer to a rate cut in September, especially after the Bureau of Labor Statistics reported that workers' real average hourly earnings fell 3.9% from the previous year. In addition, the labor force participation rate rose slightly to 62.6% in June from 62.5% in May. According to CNN, the slowdown in wages is a strong motivation for the Fed to start cutting interest rates.

According to CME's Fed Watch interest rate futures contract tracking system, traders currently expect the probability of two rate cuts in 2024 to be 47%, up from 24% the previous week. In addition, Yahoo Finance said that Federal Reserve Chairman Powell is paying close attention to the employment rate, adding that the central bank is "increasingly aware of the risks posed by a cooling labor market."

Bitcoin Technical Analysis

CMTrade said that Bitcoin RSI is below 50, MACD is negative and below its signal line, and the configuration is negative.

Moreover, the price is trading below its 20 and 50-period moving averages at $58,052 and $57,889 respectively.

“Our pivot is at $58,280 and our preference is that as long as $58,280 is resistance, the downside will prevail.”

“The alternative is an upside breakout above $58,280 which would target $59,150 and $59,670.”