Bitcoin bulls fail again, but there is still hope Bitcoin failed to break through key resistance on Thursday despite a positive U.S. inflation report.
BTC bulls failed to break through key resistance following positive U.S. inflation data, leaving room for further declines. Downside may be limited as the recent oversupply in Germany’s Saxony state has been exhausted. One top broker said that Fed rate cut expectations and FTX repayments may provide support.
Thursday was a big day for the cryptocurrency market, as Bitcoin (BTC) failed to break through key resistance despite a positive U.S. inflation report, maintaining its downward trajectory since early June.
On Thursday, the market quickly unwound bets on a Fed rate cut after the U.S. reported the first drop in consumer prices in four years, driving riskier assets including BTC higher.
For a while, it looked like Bitcoin bulls would gain a foothold above the descending trendline, which characterized the sell-off from the June high near $72,000. Such a move would signal the end of the pullback and could attract momentum traders.
However, bullish hopes were quickly dashed as prices turned lower from trendline resistance, falling below $57,000 earlier today.
Against the backdrop of positive macro news, the recent bull run failure could mean further price weakness ahead. A similar trendline rejection on July 1 was costly, exacerbating the sell-off.
Still, there is hope for bulls. The daily MACD histogram, an indicator used to measure trend strength and change, is hinting at a crossover above zero, a sign that momentum is about to take a bullish turn.
The supply glut in the German state of Saxony, which caused Bitcoin prices to fall earlier this month, is close to exhaustion. Moreover, it is uncertain what percentage of the 95,000 Bitcoins (part of the total 140,000 Bitcoins scheduled to be distributed to Mt. Gox creditors) will be liquidated.
“The prospect of FTX repaying $16.3 billion in the coming months will translate into buying pressure, the increasingly positive bipartisan attitudes toward cryptocurrencies, and the possibility of a September rate cut will benefit risk assets broadly, which should encourage medium- to long-term bulls,” crypto prime broker FalconX said in a newsletter on Friday.
