BTC Dips on US Data Beat
Bitcoin reversed sharply from fresh all-time highs yesterday with the futures market dropping more than 7% as traders reacted to the latest US data. US PPI was seen well above forecasts last month, in contrast to the weaker-than-forecast CPI data we saw earlier in the week. That CPI data fuelled an uptick in traders’ dovish Fed forecasts, leading USD lower and paving the way for a breakout move in Bitcoin. However, that initial bullish momentum has been tempered on the back of yesterday’s PPI data.
September FOMC
Looking ahead, BTC is likely to see plenty of volatility in the run up to the September FOMC as traders look to gauge how the Fed will act. A .25% rate cut is almost fully priced in at this point, which should keep risk sentiment underpinned. Any further data weakness ahead of the meeting should reinforce this dovish view with traders looking for a further Fed rate cut ahead of year end. As such, BTC stands to gain ground on any US data disappointment and dovish Fed commentary. On the other hand, if we see data start to improve, this could dampen expectations of a more dovish outlook from the Fed next month. While a September cut is still the bas case scenario, if expectations of a further 2025 cut weaken, this should fuel further corrective movement in BTC as risk assets cool off.
Technical Views
BTC
The rally in BTC has stalled for now into the latest test of the 121,500 level and the rising wedge resistance line. Price has now formed a large bearish engulfing candle at a potential double top site, into the apex of the rising wedge with strong bearish divergence in momentum studies. As such, risks of a deeper correction lower are seen with 108,855 the downside target if we do push lower here. Topside, 136,395 is the next bull objective.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.