As a seasoned analyst with over two decades of experience in global financial markets under my belt, I’ve seen my fair share of market fluctuations, and this current Bitcoin situation seems to be following a familiar pattern. The recent drop in Bitcoin price is not entirely unexpected given the high-impact news from central banks like the BoJ and the Fed. However, it’s important to remember that every downturn in the market is an opportunity for those who can read between the lines and make informed decisions.
In the previous 24 hours, the combined value of all cryptocurrencies fell by over 3%, settling around $2.41 trillion. This decline was predominantly driven by Bitcoin (BTC). At the end of last month, Bitcoin closed with a dragonfly doji candlestick, suggesting a decrease in bullish sentiment. Using data from TradingView, it can be seen that Bitcoin’s price dropped more than 3% within the past day, reaching a daily low of approximately $63,572.
As a result, over $225 million was withdrawn from the cryptocurrency derivatives market, with the majority of these transactions being long positions held by traders.
Bitcoin Price Reacts to FOMC Data
Over the past day, the unexpected drop in Bitcoin’s price appears to be a response to significant news announcements from both the Bank of Japan (BoJ) and the Federal Reserve. Specifically, on Wednesday, the BoJ raised its key interest rate by a small amount (0.15 basis points) to 0.25%, contrary to analysts’ expectations that it would remain at 0.10%. This unexpected move might have caused a ripple effect in the Bitcoin market.
As a researcher, I later observed that, in line with expectations, the Federal Reserve opted to keep its key interest rate steady at 5.50 percent in the afternoon of the given day.
As a crypto investor, I’ve been closely monitoring the situation with US inflation, and here’s what I’ve gathered: The Federal Reserve reported that inflation has lessened over the past year, but it remains high enough to potentially trigger a rate reduction. However, Fed Chair Jerome Powell hinted that such a rate cut could be implemented as early as September, provided that the slowdown in inflation continues.
As an analyst, I can share that we’ve made some substantial strides lately in moving towards our Committee’s goal of maintaining a 2% inflation rate. Our objective is to strike a balance between full employment and this target inflation rate over the long term. In my view, the risks associated with achieving both our employment and inflation objectives have become more evenly distributed recently.
Spot BTC ETF Update
On Wednesday, the Mini Bitcoin ETF by Grayscale debuted and amassed approximately $1.8 billion in Bitcoins, which were transferred via Coinbase Prime from GBTC. As per the most recent market information, BlackRock’s IBIT experienced a net cash influx of around $21 million on Wednesday, bringing its total net holdings to an impressive $22.58 billion.
On Wednesday, Fidelity’s FBTC experienced an outflow of approximately $32 million in cash, whereas ARKB recorded a cash outflow of around $4.61 million during the same day.
What’s Next?
As an analyst, I’ve noticed that over the past four months, Bitcoin’s price has been exhibiting a potential reversal pattern, specifically a triple top formation and bearish divergence on the weekly scale. This is further supported by veteran trader Peter Brandt’s observation of Bitcoin forming lower highs and lower lows in recent months, which suggests a downward trend.
The series of lower highs and lower lows continues $BTC
— Peter Brandt (@PeterLBrandt) July 31, 2024
Despite the increased fear of further Bitcoin capitulation in August, on-chain data shows long-term buyers remain focused on the ultimate parabolic rally ahead.
If the current support level of Bitcoin ($60k – $61k) doesn’t produce favorable outcomes, its value might decrease by up to $52k within the next few weeks, viewed from a technical perspective.
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2024-08-01 13:31