On Thursday (August 22), Bitcoin hit $61,820 before reversing and falling, facing strong selling pressure in the short term. The Federal Reserve FOMC meeting released a signal of a rate cut in September, providing support for cryptocurrency buying, but Mt.Gox, the former largest cryptocurrency exchange headquartered in Japan, made its first major transfer of $700 million in three weeks, and Germany raided and seized 13 cryptocurrency ATMs.
Fed FOMC meeting minutes are dovish: rate cut is possible in September
Bloomberg reported that several Fed officials acknowledged at the July 30-31 meeting that there was a legitimate case for a rate cut before the Fed's policy committee voted unanimously to keep interest rates steady. The minutes of the meeting released in Washington on Wednesday said: "Several members judged that the recent increase in inflation and unemployment provided a reasonable basis for lowering the target range by 25 basis points at this meeting or that they could have supported such a decision."
“The vast majority of members judged that if data continued to move in line with expectations, it would likely be appropriate to ease policy at the next meeting,” the minutes said.
The minutes from the meeting highlighted a growing realization among policymakers that the risks to achieving inflation and employment goals are now roughly equal, even as borrowing costs remain at 20-year highs. Fed Chairman Jerome Powell said at a July 31 press conference that the committee wants "greater confidence" that inflation will reach its 2% target before it starts cutting rates.
“Most participants noted that risks to the employment objective had increased, while many noted that risks to the inflation objective had decreased,” the minutes said. “Some participants noted that a further gradual easing of labor market conditions could turn into a more significant deterioration.”
The discussion suggests the committee has begun to shift toward a labor market risk management approach. Although the 25 basis point rate cut in September marked a small adjustment toward normalization, some analysts said the Fed needs to accelerate the pace of rate cuts to ensure a soft landing for the U.S. economy.
“It comes down to whether the Fed needs to cut rates sooner,” said Priya Misra, managing director and portfolio manager at JPMorgan Asset Management. “If the risk is a deterioration in the labor market, I think the pace of rate cuts should be faster, 50 basis points at a time until we get back to neutral, and then we can adjust the pace of rate cuts more cautiously.”
Futures markets are pricing in about 100 basis points of rate easing over the rest of the year.
The Federal Reserve's prospect of a dovish rate cut in September provided buying support for the cryptocurrency market. FXStreet pointed out that risky assets such as cryptocurrencies and stocks tend to perform strongly in a low interest rate environment.
The cryptocurrency rally has also led to a rise in derivatives liquidations, with short traders seeing more than $31 million in liquidations in the past four hours.
Multiple crypto community members expressed confidence that the recent rally could be a resumption of the bull market, especially if the Federal Reserve ends up cutting interest rates in September.
However, negative news in the cryptocurrency circle still suppressed buying.
Mt.Gox Exchange: $700 million in Bitcoin transferred, first major transfer in three weeks
Defunct cryptocurrency exchange Mt. Gox just moved about 12,000 bitcoins to a new, unknown wallet address, the first major transaction since late July.
Mt. Gox took this action at around 11:39 PM (UTC) on August 20, sending 12,000 bitcoins worth $709.4 million to an empty address beginning with "1PuQB."
It also sent 1,265 bitcoins, valued at $74.8 million, to an address beginning with "1Jbez," which was marked as a Mt. Gox cold wallet on Arkham Intelligence. The funds have not been moved since then.
The major move could mean Mt. Gox is preparing to distribute more bitcoin to its creditors, who have been waiting to get their cryptocurrency back since the exchange was hacked and collapsed in 2014.
But Galaxy head of research Alex Thorn thinks otherwise, arguing that only a small portion of the transferred funds ($74.5 million) are intended to be distributed, with the rest going into "fresh cold storage" still owned by the estate.
Regardless, this marks the first large-scale transfer of Bitcoin from Mt. Gox since July 30, when Mt. Gox moved 47,229 Bitcoins to three unknown wallets within three hours.
German government raids 13 cryptocurrency ATMs
Germany's top financial regulator, the Federal Financial Supervisory Authority (BaFin), announced on Tuesday that it had seized unauthorized cryptocurrency ATMs across the country. The announcement stated: "The 13 confiscated machines did not obtain the necessary permission from the German Financial Supervisory Authority during operation, posing a risk of money laundering."
With the support of the police and the Deutsche Bundesbank, BaFin officials coordinated with the Federal Criminal Police Office (BKA) to carry out operations at 35 locations, deploying around 60 officers and seizing illegally operated machines. A total of 250,000 euros in cash was also seized during the raids.
The German regulator explained that the seized machines posed a money laundering risk because they did not have the necessary licenses under the German Banking Act. Performing currency conversions between euros and cryptocurrencies is considered proprietary trading or banking activities, which legally requires explicit approval from BaFin.
BaFin pointed out that unauthorized operations are illegal and stressed that "illegal operators will be prosecuted by the police and the prosecutor's office. Violators may be sentenced to up to five years in prison."
The seized ATMs were located in several major German cities and were reportedly used by individuals with criminal intent to conduct transactions that could circumvent money laundering controls. Under Know Your Customer (KYC) regulations, transactions over €10,000 require customer identity verification to prevent money laundering. If there is suspicion of illegal activity or terrorist financing, it must be reported to the Financial Intelligence Unit (FIU).
Bitcoin Technical Analysis
The price of Bitcoin once slightly exceeded $61,000, and then reversed and fell. Bitcoin benefited from the bullish futures market, but the upward trend is difficult to sustain, and liquidity is a continuous challenge facing the global market.
Despite the obvious downside risk, Bitcoin price is still above the previous day’s open. As the 20-day and 50-day EMAs are likely to provide immediate support at $59,400, traders should proceed with caution to avoid a potential bear trap.
According to Bitcoin price prediction, traders expect an upside breakout to occur when the coin consolidates above a key support area during a Bollinger Band squeeze. In this case, the $58,000 support level provides a buying opportunity targeting the $62,000 mark, which, if breached, could pave the way for a rally to $70,000.
Traders cannot ignore the lack of liquidity in the market, which is likely to continue until the Fed cuts interest rates in September. Therefore, it may be wise to prepare for a move of DCA towards $56,000 or even $54,000, taking advantage of the lows and maximizing gains on a recovery.
