BTC Holds $60K as Fed Signals Smaller Rate Cut; Will Powell’s Speech Ignite a Bull Run?

BTC Holds $60K Amid Fed Rate Uncertainty

On Thursday, August 22, BTC declined by 1.16%, partially reversing a 3.50% rally from Wednesday, closing at $60,423. BTC saw a sharper decline than the broader market, which fell by 0.48% to a total crypto market cap of $2.097 trillion.

US Economic Indicators Suggest a Smaller Rate Cut

US jobless claims and services sector data drew investor interest on Thursday. Initial jobless claims increased modestly, easing immediate fears of a US economic hard landing.

Additionally, the S&P Global Services PMI unexpectedly rose, signaling a resilient US economy, suggesting a 25-basis point September Fed rate cut.

According to the CME FedWatch Tool, the probability of a 50-basis point September Fed rate cut fell from 38.0% on Wednesday to 26.5% on Thursday. Falling bets on a 50-basis point September Fed rate cut impacted BTC demand.

Notably, the Nasdaq Composite Index slid by 1.67% on Thursday, as investors tempered expectations of a Powell signal to aggressively cut rates.

US BTC-Spot ETF Market Inflow Streak Hinges on IBIT

On Thursday, US BTC-spot ETF market inflows moderated, reflecting investor sentiment toward the Fed rate path.

According to Farside Investors,

• Grayscale Bitcoin Trust (GBTC) had net outflows of $28.4 million.
• Bitwise Bitcoin ETF (BITB) saw net inflows of $10.0 million.
• Fidelity Wise Origin Bitcoin Fund (FBTC) reported net inflows of $9.2 million.
• ARK 21Shares Bitcoin ETF (ARKB) saw net inflows of $7.8 million
• VanEck Bitcoin Trust (HODL), WisdomTree Bitcoin Fund (BTCW), and Grayscale Bitcoin Mini Trust (BTC) reported combined total net inflows of $12.2 million.

Excluding flow data for iShares Bitcoin ETF (IBIT), the US BTC-spot ETF market saw total net outflows of $10.7 million, possibly ending a five-day net inflow streak.

US BTC-spot ETF market flow trends may retrigger concerns about supply. The US government currently sits on a substantial BTC stockpile of 203,239 BTC ($12.36 billion). Additionally, Mt. Gox has 44,899 BTC ($2.73 billion) remaining to repay creditors. The possible risk of BTC sell-orders from the US government and Mt. Gox’s creditors flooding exchanges remains a BTC headwind.

Key Events to Watch

On Friday, August 23, the highly anticipated Fed Chair Powell’s speech at the Jackson Hole Symposium may influence BTC demand. Despite the market reaction to Thursday’s US data, easing threats of a US recession and Powell’s support for multiple 2024 Fed rate cuts could boost BTC demand.

Investors should remain alert amid possible changes to supply-demand trends. Stay updated with our latest news and analysis to manage exposure to BTC and the broader crypto market.

Technical Analysis

Bitcoin Analysis

BTC hovered below the 50-day EMA while remaining above the 200-day EMA, affirming bearish near-term but bullish longer-term price signals.

A break above the 50-day EMA could give the bulls a run at the $64,000 resistance level. Furthermore, a breakout from the $64,000 resistance level may signal a move toward the $69,000 resistance level.

Fed Chair Powell, US BTC-spot ETF market flow trends, and supply-related news require consideration.

Conversely, a drop below the $60,365 support level would bring the 200-day EMA into play. A fall through the 200-day EMA could give the bears a run at $55,000.

With a 50.93 14-Daily RSI reading, BTC may rise to the $64,000 resistance level before entering overbought territory.

Ethereum Analysis

ETH hovered well below the 50-day and 200-day EMAs, confirming the bearish price trends.

An ETH breakout from the $2,664 resistance level could signal a move toward $2,800. Furthermore, a return to $2,800 could bring the 50-day EMA into play.

US ETH-spot ETF market-related news also requires consideration.

Conversely, an ETH drop below $2,500 could signal a fall toward the $2,403 support level.

The 14-period Daily RSI reading, 42.98, indicates an ETH drop below the $2,403 support level before entering oversold territory.