Bitcoin (BTC) is targeting $65,000 as the August monthly close approaches with a welcome recovery.
The largest cryptocurrency has seen incredible strength over the past week, and traders are hoping the positive trend continues.
Excluding the weekend’s sideways move, BTC/USD is solidly in an uptrend, up a whopping 40% from its low of $45,500 this month.
Therefore, the upcoming monthly candle close is expected to provide an interesting trading environment as expectations grow that the pair will break out of the consolidation phase that has lasted for almost half a year.
Could Bitcoin Finally Reach All-Time Highs Again?
So far this month, BTC/USD has almost returned to its starting position, but there are still plenty of factors that could drive volatility going forward.
The weekend is expected to see a flurry of macroeconomic data, which will present a fresh test for increasingly risk-averse Bitcoin short-term holders.
Meanwhile, the fundamentals look good and we expect mining difficulty to increase slightly going forward.
Sentiment has returned to neutral territory again, and regular crypto investors are shaking off their fears at an impressive rate.
Cointelegraph takes a closer look at Bitcoin ahead of its major week in the cryptocurrency market, which was seeing rising expectations of a new bear market just two weeks ago.
Bitcoin Monthly Closing Notes
Bitcoin has been steadily recovering since a rough start to August, but investors’ attention is now focused on the monthly close.
This event is a volatility trigger in itself, and while it is up 40% from its low this month, BTC price action has to deal with many factors.
Popular trader Daan Crypto Trades summarized to X that “Bitcoin almost reached break-even in August,” along with data from monitoring resource CoinGlass.
Nonetheless, order book liquidity insights show that strong resistance remains overhead, with spot BTC prices separated by a wall of all-time highs and bids.
“Now let’s see if there is actually any fuel to push the price higher,” Daan Crypto Trades added.
In another post, he acknowledged that the BTC price has been consolidating for an unprecedentedly long time since its all-time high in mid-March.
“Bitcoin has been in a ‘consolidation’ for almost six months at its previous cycle high,” he told his followers.
“This is the longest time it has taken to break a previous all-time high. It is also the fastest time for prices to make a new all-time high in one cycle (before the halving). Everything is balanced.”
Fellow trader Crypto Tony also joined the argument that solid support needs to be reclaimed to sustain further recovery moves.
As of this writing, BTC/USD was hovering around $63,700 after remaining flat throughout the weekend, according to data from Cointelegraph Markets Pro and TradingView.
PCE Weekly Arrives Midway in Fed Funds Rate Cut Countdown
The Federal Reserve’s “favorite” inflation measure was one of the highlights of this week’s macroeconomic data as markets grew more confident about easing monetary policy.
The July Personal Consumption Expenditures (PCE) Index report is due out on August 30, a day after the release of the U.S. Q2 GDP data.
Both events follow NVidia’s major earnings reports, which have become a benchmark for gauging the health of the tech industry this year.
“Fasten your seatbelts for an intense week ahead,” trading resource Gobeishi Letter told X followers.
“With Nvidia earnings and PCE inflation coming out in the same week, it created very good trading conditions,” he wrote.
The PCE was released at a time when the market was expecting a 100% chance of a rate cut in mid-September, with growing confidence that the cut will be at least 0.25%.
According to the latest data from CME Group’s FedWatch tool, the odds of a 25-basis point and 50-basis point cut are estimated at 61.5% and 38.5%, respectively.
“August payrolls will be crucial as the September rate cut is confirmed but it is not clear how much it will be cut,” trading firm QCP Capital wrote in an update to its Telegram channel subscribers over the weekend.
“A 25bp cut would likely be bullish, while a 50bp cut could signal the Fed is taking emergency action to prevent an economic downturn.”
Mining difficulty is expected to turn upward
The fundamentals of the Bitcoin network are showing signs of a 180-degree turn since last month’s testing ground.
The mining sector is on the rise despite reports of declining profitability, according to the latest estimates from monitoring agencies BTC.com and MiningPoolStats.
Mining difficulty, which dropped by 4.2% during the last auto-adjustment, is expected to recover by 2.8% this week.
This leaves the price of BTC just inches from new highs, thus offsetting the impact of its plunge below $50,000 in early August.
At the same time, raw hashrate readings suggest that there is still a clear upward trend in processing power dedicated to mining, with a new all-time high surge recorded on August 23rd, reaching 774 exahashes per second (EH/s), with known pools contributing 682 EH/s.
Cointelegraph previously reported that despite miner selling having decreased in recent weeks, its overall impact on BTC price movements remains minimal compared to institutional investors.
Short-term BTC holders distribute $10 billion a week.
Short-term Bitcoin holders (STH) distributed their coins to the market as prices recovered last week.
According to data from on-chain analytics platform CryptoQuant, as of August 25, the STH cohort’s weekly net position change was over $10 billion lower.
“This indicates that STH sales have increased,” contributor Amr Taha wrote in one of the platform’s Quicktake blog posts, referencing a chart from fellow analyst Axel Adler Jr.
STH entities are entities that hold a certain amount of BTC for less than 155 days and are on the more speculative end of the Bitcoin investment spectrum.
The recent BTC price volatility has hit this group hard, with BTC/USD seeing massive sell-offs to its lowest levels in six months.
The STH total cost benchmark is now being looked at as a potential support line if a new price decline begins.
According to data uploaded to X by investment firm MS2 Capital, the consolidated STH cost base is currently $63,600.
The cost basis for those who hold for up to a month among investors is $60,000 to $62,000.
Cryptocurrency soars on the brink of ‘extreme fear’
Unsurprisingly, the BTC price recovery last week had an immediate impact on cryptocurrency market sentiment.
Related: MATIC, SUI, RENDER and TAO Could Surge If Bitcoin Holds $64,000
This is reflected in the Crypto Fear & Greed Index, which has more than doubled in a matter of days, rising from 26,100 on August 21 to 55,100 at the time of writing.
The corresponding sentiment shift suggests that the mindset of the average cryptocurrency investor has shifted from “extreme fear” to “greed.”
The recovery is reflected in the CryptoQuant indicator for Bitcoin futures market sentiment, which narrowly avoided a trip to “extreme fear” in August.
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.