On August 22, Bitcoin (BTC) experienced a decline of 1.16%, partially offsetting a previous rally of 3.50%, ultimately closing at $60,423. This drop was more pronounced than the general market, which saw a slight decrease of 0.48%, resulting in a total cryptocurrency market capitalization of $2.097 trillion.

Investor sentiment was influenced by recent data regarding US jobless claims and the performance of the services sector. The modest rise in initial jobless claims alleviated urgent concerns about a potential economic downturn in the United States. Furthermore, the unexpected increase in the S&P Global Services Purchasing Managers’ Index (PMI) signaled a robust US economy, supporting speculation regarding a 25-basis-point rate cut by the Federal Reserve in September.

According to the CME FedWatch Tool, the probability of a more substantial 50-basis-point rate cut in September decreased from 38.0% on Wednesday to 26.5% on Thursday. This diminishing expectation reduced demand for Bitcoin. Additionally, the Nasdaq Composite Index fell by 1.67%, reflecting investor caution regarding Fed Chair Jerome Powell’s potential signals for aggressive rate cuts.

On August 22, there was a notable moderation in inflows within the US Bitcoin-spot exchange-traded fund (ETF) market, indicative of shifting investor sentiment about the Fed’s anticipated monetary policies. Recent data indicated a total net outflow of $10.7 million from the US BTC-spot ETF market, excluding flows for the iShares Bitcoin ETF, potentially marking the end of a five-day streak of net inflows.

The ongoing trends in the US BTC-spot ETF market may reignite concerns surrounding supply, particularly given that the US government holds a significant Bitcoin stockpile of 203,239 BTC, valued at approximately $12.36 billion. Moreover, Mt. Gox possesses 44,899 BTC, approximately worth $2.73 billion, pending distribution to creditors. The prospect of BTC sell-offs from these entities looms as a potential headwind for the cryptocurrency.

Looking ahead to August 23, speculation surrounds Fed Chair Powell’s anticipated speech at the Jackson Hole Symposium, which may play a pivotal role in influencing Bitcoin demand. While the market reacted to the data released on Thursday, the easing recessionary fears and Powell’s potential endorsement for multiple Fed rate cuts in 2024 could enhance Bitcoin’s attractiveness to investors.

Market participants are advised to remain vigilant amidst possible fluctuations in supply and demand dynamics. Current technical indicators reveal that Bitcoin is trading just below the 50-day exponential moving average (EMA) while maintaining a position above the 200-day EMA, indicating bearish tendencies in the short term but bullish prospects in the long run. A breach above the 50-day EMA could pave the way for a challenge at the $64,000 resistance level, while a breakout beyond this point could signal a further movement toward $69,000. Conversely, a decline below the $60,365 support level may bring the 200-day EMA into the spotlight, with further downturns potentially targeting the $55,000 mark.

As for Ethereum (ETH), it remains significantly below both the 50-day and 200-day EMAs, reinforcing bearish trends. A successful breakout beyond the $2,664 resistance level could suggest momentum towards $2,800, with a return to this threshold activating scrutiny of the 50-day EMA. A fall beneath $2,500 could trigger a retreat towards the $2,403 support level, while the 14-period Daily Relative Strength Index (RSI) reading of 42.98 indicates a plausible drop before reaching oversold conditions.

In conclusion, the actions of Fed Chair Powell, alongside US Bitcoin-spot ETF market trends and supply dynamics, warrant thorough consideration by market participants. Continuous monitoring of these factors will be essential in navigating the complexities of Bitcoin and the broader cryptocurrency markets effectively.

With over two decades of expertise in the finance sector, Mr. Bob has adeptly led regional teams across Europe and Asia, specializing in analytics that span corporate and financial institutions. He is currently focused on elucidating developments within the financial markets, covering a broad spectrum of assets including currencies, commodities, alternative investments, and global equities.

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