- Wednesday, October 16, 2024
Bitcoin and other cryptocurrencies have seen a slight decline in price after a recent rally. Traders are now eagerly awaiting inflation data, which is set to be released on Thursday, as August has historically been a challenging month for Bitcoin.
Over the past 24 hours, the price of Bitcoin has dipped less than 1% to $27,200. Despite reaching a peak above $28,000 earlier in the week, the largest digital asset has been gradually sliding back. This decline came after a landmark court ruling in favor of a spot Bitcoin exchange-traded fund against the Securities and Exchange Commission.
According to Alex Kuptsikevich, an analyst at broker FxPro, the recent surge in buying has now eased, resulting in a cooling effect on the crypto market. On Wednesday, Bitcoin briefly dropped to $27,000, marking a decrease from its initial jump from $26,000 to $28,000. The price is now below its 200-day and 200-week averages, despite the growing risk appetite in traditional markets.
Bitcoin has been trailing behind the Dow Jones Industrial Average and S&P 500 in recent days, signifying one of the quietest periods for crypto prices in history. However, traders are hopeful that Thursday's release of personal consumption-expenditures (PCE) data — the Federal Reserve's favored measure of inflation — will serve as a significant catalyst.
"After the initial excitement following the Grayscale legal victory on Tuesday, Bitcoin investors are now turning their attention to analyzing cold hard economic data in the form of the Fed's preferred inflation gauge," commented Antoni Trenchev, co-founder and managing partner at crypto lender Nexo.
Economic Data and Bitcoin's Outlook
Economic data continues to play a crucial role in determining the fate of risk-sensitive assets, as investors adjust their expectations regarding interest rates. The Federal Reserve, taking measures to tame inflation, has elevated rates to a generational high since March 2022. This move has had a significant impact on Bitcoin and stocks alike. However, signs of slowing inflation and a weakening economy may prompt the Fed to reconsider and potentially even decrease borrowing costs.
With the release of the Personal Consumption Expenditures (PCE) data on Thursday and the August jobs report on Friday, these two events assume great importance. Should the PCE data indicate a decline, coupled with a slowing job market, Bitcoin could witness renewed activity. Navigating past Tuesday's short-lived rally, there is a possibility of another push towards the late $20,000s, as suggested by Trenchev.
This upcoming period may represent the final opportunity for digital assets to experience significant growth before the start of September trading. Historically, September has been known as one of the worst months for Bitcoin. "If history is a guide, August is just an entrée for the main dish that’s September, which has only witnessed two monthly gains in a decade, the last of which was in 2016," stated Trenchev.
Aside from Bitcoin, other cryptocurrencies also experienced varied performance. Ether, the second-largest crypto, declined marginally by less than 1% to $1,700. Altcoins such as Cardano showed a slight decrease of less than 1%, while Polygon exhibited a modest increase of less than 1%. On the other hand, Dogecoin recorded a 2% increase, whereas Shiba Inu witnessed a 1% fall.
In summary, the upcoming release of economic data holds immense significance for risk-sensitive assets like Bitcoin. While there may be opportunities for further growth, history indicates that September could present challenges for the cryptocurrency. The performance of other cryptocurrencies has been mixed, with some experiencing minor fluctuations. The overall market continues to be influenced by various economic factors and market dynamics.
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