Bitcoin (BTC) begins the new week struggling to hold key support levels as markets brace for a surge in macroeconomic volatility triggers.
- BTC/USD remains above $54,000 on the weekly close, giving traders reasonable confidence in how the short-term BTC price action will unfold.
- The CPI and PPI are the main weekly indicators of US macroeconomic data, with less than 10 days until the Federal Funds (Fed) interest rate decision.
- Cryptocurrency funds lost $600 million last week, while spot Bitcoin ETFs also saw steady net outflows.
- According to the fractal that has been valid throughout the year, BTC price performance looks “eerily similar” to 2019.
- Investors are eyeing a potential 20% bounce as BTC/USD continues to maintain a sloping channel following its all-time high in March.
The BTC price decline reflects the standard “Rektember”.
Bitcoin has been showing a different side of itself than in the past few weeks, avoiding significant selling around its recent weekly close.
Data from Cointelegraph Markets Pro and TradingView currently shows $55,000 as the level at which bulls are expecting a recovery.
“If price holds above $54,500, I would expect a break above this green zone to see if Bitcoin can regain upside momentum,” popular analyst Caleb Franzen wrote in one of his latest posts on X, along with a chart.
Data from monitoring resource CoinGlass shows that a band of selling liquidity is being added around the $55,500 area. CoinGlass said in its own X post that it expects the upside to continue.
Popular trader Crypto Tony concluded that support levels “need to hold at $52,500 for short-term sustainability.”
“I think the next few weeks will be interesting.”
Despite this, BTC/USD fell 7% in September, which is in line with historical averages.
“Bitcoin is in a halving year, so it makes the most sense to compare 2024 to the previous halving years,” popular trader and analyst Rekt Capital argued while discussing the performance figures.
“During previous halvings (2016 and 2020), Bitcoin had three consecutive months of gains in October, November, and December.”
The CPI is ahead of the key Federal Reserve interest rate cut decision.
Ahead of the Federal Reserve’s important interest rate decision on September 18, a slew of U.S. macroeconomic data is released.
The Consumer Price Index (CPI) and Producer Price Index (PPI) for August are expected to be released, and the unemployment rate is also expected to rise further.
While the latter accounted for most of the risk asset reaction last week, markets are now anticipating a last-minute surprise that could change expectations about the Fed’s next move.
“This is the last week of inflation data before the long-awaited September Federal Reserve meeting,” trading resource The Kobeissi Letter wrote as part of its latest X post on the topic.
Kobeishi noted that U.S. stocks have been in a downtrend since the beginning of the month, with Bitcoin and altcoins being no exception to the trend.
“It appears that the S&P 500 will not have a single green day in September 2024, which is a great trade setup,” he added.
The market still favors a more modest rate cut of 25 basis points rather than 50, according to the latest estimates from CME Group’s FedWatch Tool. But that could change as macro data comes in.
Meanwhile, Kobeishi is one of those who argue that the Fed is unlikely to make an unexpected upward move.
“As we have been saying for weeks, neither a 50bp rate cut nor an emergency rate cut is needed,” the report said after last week’s unemployment data.
“With the labor market cracking, the Fed must be careful not to move too quickly again. The Fed has a rough road ahead.”
Cryptocurrency Institutional Investments Record ‘Deficit’ Week
Last week was not a good one for cryptocurrency institutional investors, with capital flowing out of the sector.
Bank of America (BoA) has revealed the largest cryptocurrency fund outflow since the 2022 bear market, especially amid the bear market.
Kobeishi noted that this was the second-largest outflow in the industry’s history, reaching about $600 million last week alone.
Part of the X post reported, “Crypto funds have seen steady outflows in the past few weeks, compared to weekly inflows of $3.3 billion in Q1.”
“Risk sentiment towards cryptocurrencies appears to have disappeared despite expectations that the Fed will cut rates this month.”
The picture is equally grim for spot Bitcoin exchange-traded funds (ETFs) in the United States, which saw net outflows every day last week.
According to data from Farside Investors, a UK-based investment firm, two out of four trading days recorded net outflows of more than $200 million.
“Bitcoin has fallen about 15% over the past two weeks and is trading about 25% below its all-time high,” Kobeishi concluded.
“Is the cryptocurrency market entering a bear market?”
Bitcoin 2019 Comparison, Approaching a “Critical Point”
The current BTC price action is increasingly being compared to 2019 (before the two block subsidy halvings).
BTC/USD then made a long-term high in mid-year before consolidating into Q4 2020, during which time we witnessed the COVID-19 cross-market crash.
History is now repeating itself, according to Julien Vittel, head of macroeconomic research at Global Macro Investor.
“The Bitcoin price structure this year is starting to look eerily similar to 2019… Look closely at the charts, it’s almost a perfect fractal of what we saw back then,” he told his X followers over the weekend.
“Bitcoin has been stuck in a consolidation phase, and interestingly enough, just like in 2019, this consolidation has lasted exactly 175 days (so far). We are now approaching a critical point where things could start to move significantly.”
The fractal in question suggests that BTC/USD may soon reach an “inflection point” and turn bullish, which will likely continue.
“Next week will be very important to watch,” he summarized.
Cointelegraph recently reported on a 2019 comparison from cryptocurrency analyst and entrepreneur Michael van de Poppe, who also believes Bitcoin’s fortunes could soon turn around.
Popular trader Peter Brandt has warned that BTC/USD is moving too slowly since the most recent halving in March.
Respect the channel
This week, a simple regression channel appeared, giving Bitcoin some short-term hope for a rally.
Related: UNI, SUI, OP and HNT Could Rise as Bitcoin Range Recovers
As noted by popular analyst Caleb Franzen, BTC/USD is currently challenging support at the lower boundary of the channel it has been in since mid-March and its all-time high of $73,800.
This channel neatly summarizes the consolidation over the next six months, even though it did drop below $50k in early August, it wasn’t enough to invalidate the consolidation.
“Bitcoin has closed below the retracement channel for the fourth time,” Franzen confirmed on September 7, noting three other similar instances.
While he emphasized that such daily closes alone do not guarantee a bounce, he noted that the previous three instances all resulted in BTC prices rising by “at least” 20%.
A repeat performance here would see a move towards $65,000, which would push Bitcoin’s core technical area to its peak and provide a total cost basis for short-term holders.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.