Fed’s Rate Cuts May Disappoint. Can Bitcoin Hold Above $57K?
Bitcoin Faces Resistance at the 50-Day MA: Do the Bulls Have Enough Oomph to Break It?
The Fed is very likely to trim the rates in September and that’s no secret or surprise. However, they might be cutting less than some market participants are hoping for. There’s a growing concern that the market might be overestimating the likelihood of significant rate cuts, with some expecting as much as 100 basis points by the year’s end. However, there’s little evidence to back up such an aggressive stance from the Fed, which many Bitcoin pundits believe is necessary for the cryptocurrency to break its current all-time high.
Interest rates play a huge role in Bitcoin’s market dynamics. Higher rates tend to make safer investments like bonds and term deposits more appealing, potentially drawing funds away from Bitcoin. Conversely, lower rates often push investors towards riskier assets, including Bitcoin.
U.S. Government Transfers $600M in Seized Bitcoin to Coinbase Prime
In other news, earlier in the week the U.S. government made a significant move involving its seized Bitcoin. Recent blockchain data from Arkham Intelligence, highlighted by CoinDesk, shows that 10,000 Bitcoins connected to the notorious Silk Road case have been transferred to Coinbase Prime.
This transfer, valued at around $600 million, originated from a wallet with the tag “U.S. Government: Silk Road DOJ Confiscated Funds”. So, it shows clearly that this wallet is linked to the Department of Justice’s confiscation of assets from the dark web marketplace.
While large inflows to exchanges often indicate an intent to sell, it’s speculated that this move might be related to custody rather than liquidation. This theory aligns with the U.S. Marshals Service’s recent collaboration with Coinbase Prime for the management and trading of large-cap digital assets.
Bitcoin’s price dipped from $61,000 to $59,000 earlier on the day of the transfer. However, this decline happened before the government’s transaction, supporting the idea that the transfer wasn’t the cause.
Chart Analysis – BTC/USD
Bitcoin is currently changing hands at $58,300 and it looks like it’s slowing down after the strong recovery from $49,577 to $62,729. We can see several daily candles that barely touched the 50-day Moving Average and then immediately dropped, indicating that the level has a high technical importance.
Now that the support at $57,000 was touched, we are dealing with a bounce-or-break scenario which will decide the next move. We have to remember that the descending parallel channel rejected price recently, which means the next destination should be its upper boundary if history repeats itself. But Bitcoin is known for its volatility, so the “should” part is vague.
The RSI is neutral but it was recently oversold, which aided the swift recovery; however, that impulse has dimmed down now. The most telling part will be the way BTC/USD behaves at $57,000: if it bounces and then breaks the 50 MA, we will probably see another touch of the upper part of the channel.
