Stock & Crypto

Bitcoin Bulls Face Temporary Setback, but Optimism Persists

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Bitcoin could not topple a key resistance on Thursday despite positive U.S. inflation report.

Bitcoin Bulls Stumble Despite U.S. Inflation Data; Hope Persists

Bitcoin bulls faced another setback after failing to breach crucial resistance levels following positive U.S. inflation data, suggesting potential for further declines.

However, the downside may be limited as recent selling pressure from Germany’s Saxony state appears to have subsided. Additionally, expectations of Federal Reserve rate cuts and upcoming repayments by FTX could provide support, according to a prime broker.

Thursday was a pivotal day for crypto markets as bitcoin struggled to break above a key resistance level despite favorable U.S. economic reports. The market initially reacted positively to news of the first drop in consumer prices in four years, fueling speculation of future Fed rate cuts and boosting higher-risk assets like BTC.

There was a fleeting moment where bitcoin seemed poised to establish support above the descending trendline that has characterized its decline since reaching highs near $72,000 in June. Such a move would have signaled a potential reversal and attracted momentum traders.

However, hopes were dashed as prices retreated from the trendline resistance, slipping below $57,000 early the following day.

Despite the recent setbacks, there are signs of optimism for bitcoin bulls. The daily chart’s MACD histogram, a tool used to measure trend strength and shifts, hints at a potential bullish momentum crossover above zero.

Moreover, the selling pressure from Saxony state in Germany, which triggered earlier price drops this month, is nearing exhaustion. Uncertainty remains over the impact of the 95,000 BTC scheduled for distribution to Mt. Gox creditors, with potential implications for market dynamics.

“The expectation of significant FTX repayments over the coming months translating into buying pressure, positive sentiments towards cryptocurrencies across the board, and the potential for a September interest rate cut supporting risk assets could bolster medium- and long-term bullish outlooks,” noted crypto prime broker FalconX in a Friday newsletter.

FalconX also highlighted that any selling pressure from Mt. Gox creditors may differ in nature from Saxony’s sales, potentially affecting market dynamics differently.

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