Bitcoin’s price saw a sudden drop on August 14, falling by 5% despite what was initially seen as positive news from the United States inflation data. The cryptocurrency initially surged to nearly $62,000 following the latest Consumer Price Index (CPI) print, which came in lower than expected, typically a bullish signal for risk assets like Bitcoin. However, the rally was short-lived, with BTC/USD quickly losing over $3,000 within just over an hour, plummeting below $59,000.

Traders Cautious Amid Market Volatility

The swift reversal caught many traders off guard, though some, like Daan Crypto Trades, had previously warned of erratic price movements around the release of US macroeconomic data. “CPI Coming in mostly at estimates. Pretty good and doubt this impact markets much in the end,” he commented, suggesting that the markets might have been set to move in their own direction regardless of the CPI results.

BTC/USD 1-hour chart. Source: TradingView

According to the latest data from CME Group’s FedWatch Tool, market participants still expect a small interest rate cut from the Federal Reserve at its next meeting in September. The Kobeissi Letter, a trading resource, noted that while lower headline inflation points to upcoming Fed rate cuts, these cuts could also lead to a resurgence in inflation in certain categories.

Outlook Remains Bearish, Potential Further Drops Expected

Looking ahead, some traders are eyeing lower levels as potential entry points for long positions. Roman, a popular trader on X (formerly Twitter), suggested that Bitcoin could drop another 10% from its current levels, possibly reaching $55,000 before stabilizing. He pointed out the lack of strong volume to support higher prices, indicating bearish price action.

Source: The Kobeissi Letter

“My plan has remained unchanged for the last week. Not seeing strength here for continuation upwards as we have bearish price action (low vol + price up),” Roman explained, underscoring the cautious sentiment among traders as Bitcoin faces ongoing market challenges.

Bitcoin (BTC) remained unfazed on August 13, as global markets reacted to significant macroeconomic developments. While Japan’s stock market experienced a full recovery from its historic crash earlier in the month, Bitcoin’s price action remained subdued, staying below the $60,000 mark.

Japan’s Nikkei 225 Recovers

The Nikkei 225, Japan’s leading stock index, closed at 36,232 points, marking a 3.45% increase on the day. This rise allowed the index to completely recover from its earlier record losses. The positive sentiment in Japan influenced U.S. equities as well, with the S&P 500 and Nasdaq Composite Index gaining 0.8% and 1.4%, respectively, within the first hour of trading.

BTC/USD 1-hour chart. Source: TradingView

The boost in U.S. markets was further supported by the latest Producer Price Index (PPI) data, which came in below expectations. This fueled speculation that the Federal Reserve might implement a larger 0.5% interest rate cut at its next meeting in September. Prior to the PPI release, markets had expected a smaller 0.25% cut.

Bitcoin’s Reaction Remains Muted

Despite the upbeat mood in traditional markets, Bitcoin showed little reaction. According to monitoring resource CoinGlass, the bid depth around the $58,000 level increased, indicating potential buying interest, while asks strengthened at $60,000 as the spot price inched higher.

Source: The Kobeissi Letter

Popular trader Daan Crypto Trades noted that while the PPI release caused some movement, it was not significant. He pointed out that similar patterns often occur with Consumer Price Index (CPI) data, which is due for release on August 14.

All-Time High Still Possible by September

Despite the current calm, some analysts remain optimistic about Bitcoin’s future price action. Michaël van de Poppe, founder and CEO of MNTrading, suggested that if Bitcoin breaks the $60,000 level, a new all-time high could be reached as early as September or October.

BTC/USDT chart. Source: Daan Crypto Trades/X

With key inflation data on the horizon, market participants remain cautious, closely monitoring developments for clues on future price movements.

Canadian Bitcoin miner, Hive Digital Technologies Ltd. (HIVE), has reported a significant 36% increase in sales for the second quarter of 2024, reflecting the company’s strategic expansion into the high-performance computing market for artificial intelligence (AI) applications.

Impressive Revenue Growth

Hive Digital posted revenues of approximately $32 million for Q2 2024, up from $23.5 million in the same period last year. The majority of this revenue continues to stem from Hive’s core cryptocurrency mining operations. However, the company also saw its new high-performance computing platform generate around $2.6 million in sales during the quarter.

Strategic Shift to AI Compute

On July 12, 2023, Hive Blockchain Technologies rebranded to Hive Digital Technologies, signaling a shift in focus towards hosting AI and other advanced computational tasks. This pivot aims to leverage the company’s extensive inventory of Nvidia graphics processing units (GPUs). While Hive intends to maintain its presence in Bitcoin mining, it is diversifying its business by utilizing these Nvidia GPUs to create high-performance computing clusters, specifically designed to power AI applications.

The total hashrate for the Bitcoin network has more then doubled since early2023. Source: CoinWarz

In addition to its AI compute services, Hive is also exploring the rental of GPU server clusters through marketplace aggregators and the development of a new cloud service offering. The company currently operates nine data centers across Canada, Sweden, and Iceland.

Challenges and Industry Shifts

The ongoing conflict in Ukraine has posed challenges for Hive’s operations in Sweden, particularly concerning energy supply disruptions. However, Hive has managed to mitigate some of the impact of rising energy prices in Europe through forward energy agreements.

Bitcoin miners like Hive are adjusting their business models to cope with the recent Bitcoin network halving event in April 2024, which halved mining rewards. The industry is also grappling with Bitcoin’s notorious price volatility. As part of broader industry trends, companies such as Bitdeer are investing in next-generation equipment, while others like Argo Blockchain have made strategic asset sales to maintain profitability.

Bitcoin has been underwhelming in recent months, trading within a narrow range while other assets, like gold and U.S. stock indexes, have surged to new highs. However, Charles Edwards, the founder of Capriole Investments, believes Bitcoin’s price action still holds promise. In a recent X post, Edwards highlighted a pattern where Bitcoin tends to follow gold’s price movements after a delay of around three months.

Gold’s Influence on Bitcoin

Using data since late 2019, Edwards demonstrated how Bitcoin’s price often mirrors gold’s trends, albeit with a latency period. As gold recently hit an all-time high in mid-July, Edwards suggests that Bitcoin could soon begin its own upward trajectory, potentially mirroring gold’s bullish run.

BTC/USD vs. XAU/USD chart. Source: Charles Edwards

Favorable Bitcoin Growth Forecast

Looking ahead, other analysts share a positive outlook for Bitcoin, especially as it relates to gold’s performance. William Clemente, co-founder of Reflexivity, noted that gold experienced a 10-12 month consolidation period following the launch of its exchange-traded funds (ETFs) in 2004, before marking a significant price increase. He suggests that Bitcoin might follow a similar pattern, with favorable growth expected into 2025.

BTC/USD vs. XAU/USD chart. Source: William Clemente

Despite its recent stagnation, Bitcoin remains the best-performing macro asset of 2024, with a year-to-date increase of 34%, closely followed by gold at 19%. The historical performance of these assets indicates that Bitcoin’s current phase might be a precursor to a significant bullish run, as seen in gold’s recent trends.

As the year progresses, investors are advised to keep an eye on Bitcoin’s price action, especially in relation to gold’s movements, as the cryptocurrency may soon embark on a new upward journey.

Bitcoin speculators have been hit hard following a sharp downturn in BTC prices, resulting in significant unrealized losses. According to the latest research from crypto analytics firm Glassnode, the recent market turbulence has “purged” speculators, with liquidations reaching a staggering $365 million.

Short-Term Holders Suffer Most

The data reveals that Bitcoin short-term holders (STHs)—those who have held BTC for 155 days or less—are bearing the brunt of the losses. This cohort, typically more vulnerable to market shocks than long-term holders (LTHs), saw their holdings plunge into the red following the price crash. Glassnode’s analysis highlights that only 7% of STH holdings remain in profit, echoing the stress levels experienced during the BTC price dip below $30,000 a year ago.

Bitcoin STH % supply in profit with standard deviation bands (screenshot). Source: Glassnode

The STH spent output profit ratio (SOPR) metric, which measures the profitability of coins being spent, recorded historically low levels, indicating that recent investors are locking in losses averaging -10%. Glassnode noted that these depths have only been surpassed on 70 occasions in Bitcoin’s history.

Market Panic and Liquidations

The broader market reaction to the price drop has been characterized by panic and fear, with STHs “dominating” on-chain losses—just 3% of the losses were attributable to LTHs. The massive sell-off by STHs has led to what Glassnode describes as a “statistically significant capitulation,” drawing parallels to the market conditions following the FTX collapse.

Bitcoin STH SOPR chart (screenshot). Source: Glassnode

CryptoQuant, another on-chain analytics platform, suggested that the current situation might present a potential buying opportunity. Historically, SOPR levels around 0.90 to 0.95 have marked good entry points during bull trends.

Looking Ahead

August has been an “exceptionally eventful month” for Bitcoin, according to Glassnode. The cryptocurrency recorded its largest drawdown of the current cycle, a -32% drop from its all-time high, triggering a wave of liquidations and a meaningful reduction in market leverage.

Bitcoin futures liquidations (screenshot). Source: Glassnode

As the dust settles, analysts will be closely watching on-chain and spot market data to assess Bitcoin’s potential recovery in the coming weeks.

Bitcoin BTC $56,714 faces a critical challenge this week as bulls aim to secure a weekly close above $59,000 to regain control. The cryptocurrency’s rebound from six-month lows at $49,500 faces significant resistance, making this target crucial for maintaining upward momentum.

Weekly Close Critical for BTC

Popular trader and analyst Rekt Capital highlighted that Bitcoin’s next weekly close must hit $59,000 to confirm a successful reclaim of key support levels. This target is essential for Bitcoin to stay aligned with its behavior since its all-time high in March.

BTC/USD chart. Source: Rekt Capital/X

“It has happened,” Rekt Capital noted, referring to Bitcoin’s upward reversal. “Now, Bitcoin will need to close above ~$59,110 later this week to reclaim the bottom of the black channel as support and confirm a return into the pattern.”

However, this pattern faces challenges as Bitcoin has experienced a series of lower highs and lower lows, with resistance building at $70,000 and above.

Long-Term Market Strength Concerns

Another analyst, HTL-NL, pointed out concerns over Bitcoin’s long-term market strength, focusing on the relative strength index (RSI) levels on monthly timeframes. The analyst warned that a succession of lower highs in RSI suggests decreased chances for Bitcoin to return to price discovery.

BTC/USD 1-month chart with RSI data. Source: TradingView

“Word of warning: technically this looks like we had the cycle top already and not only that: we also had the bigger cycle top,” HTL-NL wrote. “Meaning a lot of the elasticity had gone out of the PA. You can see that from the decreasing RSI at each high.”

Macro Economic Influences

Despite technical challenges, some analysts believe that global macroeconomic changes could spur a broad crypto and risk-asset comeback. Former BitMEX CEO Arthur Hayes predicts that the US will soon begin adding liquidity, which could positively impact Bitcoin.

In his latest blog post, Hayes suggested that the US Treasury might inject between $301 billion to $1.05 trillion into the market by year-end. “TL;DR: Bad Gurl Yellen will inject $301bn to $1.05tn between now and year-end,” he wrote, referring to US Treasury Secretary Janet Yellen.

BTC/USD 1-hour chart. Source: TradingView

Hayes also noted that Bitcoin’s near-term performance would depend on the interplay with the US dollar and Japanese yen pair, following the unwinding of the yen carry trade.

Current Market Position

At the time of writing on August 7, Bitcoin traded around $57,500 ahead of the day’s Wall Street open, according to data from TradingView. Whether Bitcoin can secure the critical $59,000 weekly close remains to be seen, but it will be a key factor in determining the next phase of its market journey.

Bitcoin (BTC) experienced a challenging start to August, with its price falling over 14% month-to-date due to negative macroeconomic factors, including an interest rate hike in Japan, worsening US employment data, and geopolitical tensions in the Middle East. Data from TradingView shows that Bitcoin dropped to a seven-month low of $49,577 on Bitstamp after losing the key support provided by the 200-day EMA and the $50,000 level.

Massive Liquidations and Market Wipeout

The drop below $50,000 on August 5 led to significant liquidations, wiping out more than $500 billion from the crypto market. However, Bitcoin has since recovered, reclaiming $56,000 after finding support around the $54,000 zone, marking a 2.5% increase over the last 24 hours.

BTC/USD daily chart. Source: TradingView

Analysts Predict Recovery

This recovery has sparked optimism among Bitcoin analysts, who now believe in BTC’s potential to climb to higher levels. Analyst Jelle noted on August 6 that Bitcoin needed to get back above $57,000 to ensure that “all is well.” Another analyst, Mags, shared a chart showing that the relative strength index (RSI) is oversold on the daily timeframe, indicating a potential recovery driven by reduced downward momentum and increased buying interest.

Mags’ Analysis and Buying Opportunity

Mags explained that the RSI had entered the oversold zone for the fifth time in this cycle, suggesting that buying the dips could initiate a recovery in BTC. Each time the RSI dips below 30, it has historically been a good opportunity to accumulate Bitcoin. Analyst Moustache echoed similar sentiments, highlighting that the RSI had sent a bullish signal on the daily chart, presenting a “buying opportunity.”

BTC/USD chart. Source: Mags

US-Based Exchanges Show Positive Trends

Kaiko analysts corroborated this in their August 5 post on X, revealing that the recent sell-off was characterized by dip buying on US-based crypto exchanges such as Coinbase, Gemini, and Kraken. The cumulative volume delta (CVD) indicated that buying volume exceeded selling volume on these platforms.

Source: Peter Brandt

Historical Context and Future Projections

Veteran trader and analyst Peter Brandt noted that the latest post-halving correction is similar to the 2015–2017 cycle, suggesting that if the pattern holds, a “new bull cycle high” could be seen in the coming weeks. Titan of Crypto believes Bitcoin is in its “final capitulation” phase after the recent flash crash, projecting an upside above $90,000. A relief rally from current levels wouldn’t be surprising, given the historical patterns and current market conditions.

Bitcoin’s (BTC) plunge below $50,000 on August 5 led to significant losses for short-term holders, while long-term investors largely held their ground, according to data from CryptoQuant.

Speculators Realize Heavy Losses

The dramatic price drop saw Bitcoin giving up the $50,000 level amid widespread panic triggered by a sell-off in Asian stock markets. The event resulted in BTC/USD losing $20,000 in a single week.

Data analysis from CryptoQuant contributor Cauê Oliveira reveals that the majority of Bitcoin sold during this flash crash came from coins that had been held for less than a week. This category of coins, typically held by short-term speculators, moved over $5.2 billion in a single hour.

Bitcoin spent output age bands (screenshot). Source: CryptoQuant

“In total, in the age ranges up to 1 day and 1 day to 1 week alone, more than $5.2 billion was moved in a single hour,” Oliveira summarised.

Long-Term Holders Stay Resilient

In stark contrast, long-term holders, who are typically more resilient and less likely to sell during market downturns, only realized losses amounting to approximately $600,000 during this period.

“When we delve deeper into the spending pattern, we had about $850 million in loss realization in this downward movement,” Oliveira noted.

Bitcoin short-term holder spent output profit ratio (SOPR). Source: Quinten

“However, only $600,000 was realized by long-term holders. The rest was realized by short-term investors. The largest volume is concentrated in investors up to 3 months old, indicating that the price drop is putting pressure on newcomers to capitulate.”

The scale of the loss-making transactions was highlighted by Crypto investor and YouTuber Quinten, who cited data from fellow CryptoQuant contributor Axel Adler Jr.

BTC Price Faces Potential Further Decline

Despite a subsequent 10% bounce from its six-month lows, there is caution among traders regarding the future direction of BTC prices. Some are targeting price levels in the $40,000 range.

BTC/USD 1-day chart. Source: TradingView

Arthur Hayes, former CEO of BitMEX, issued a warning to his X followers on August 6, suggesting that the market relief might be temporary. Hayes anticipates further turmoil, especially among over-leveraged traditional finance investors affected by the yen carry trade fallout.

“That was the first wave. Now we wait for bodies of TradFi over-leveraged muppets to surface,” Hayes commented. “Then wave 2 begins. If there is going to be a bailout the market needs to deliver more pain by Friday. Enjoy the respite for the war shall continue.”

Bitcoin’s (BTC) price action is showing signs of potential downside, with the cryptocurrency at risk of revisiting lows below $50,000. This warning comes from popular trader CrypNuevo, who noted that Bitcoin’s recent volatility could result in a return to six-month lows.

Historical Patterns and Price Movements

Bitcoin has a historical tendency to “fill” large downside wicks within days or weeks. CrypNuevo highlighted this pattern, showing that significant wicks created by volatility often see prices revisiting the lows shortly after. He illustrated this with a chart marking all the relevant long wicks since March, emphasizing the likelihood of this new wick being filled sooner rather than later.

BTC/USDT 1-day chart with wick-fill data. Source: CrypNuevo/X

“We bounced from EXACTLY the 50% level of a previous long wick,” CrypNuevo pointed out, suggesting that the recent bounce might not be a strong indicator of sustained recovery.

Market Sentiment and Analyst Views

The current sentiment in the market is mixed, with some analysts believing that Bitcoin might have already hit a bottom. Trading firm QCP Capital mentioned that a significant leverage flush could be a positive signal for bulls.

“Yesterday’s risk-off rout flushed out a decent chunk of leverage,” QCP Capital noted in its latest bulletin. “With prices having fallen off a cliff, it is possibly time to start thinking about accumulating BTC and ETH spot.”

Macroeconomic Factors and Future Projections

QCP Capital also expressed optimism regarding macroeconomic developments, particularly in relation to the United States Federal Reserve. They believe that an emergency interest rate cut by the Fed is unlikely, which could prevent additional market panic.

BTC/USD 1-hour chart. Source: TradingView

“Asset prices are likely to stay volatile and markets remain choppy until clarity on Fed and BoJ policy is provided,” QCP stated. They are looking forward to key updates from the Bank of Japan Deputy Governor Shinichi Uchida and the Federal Reserve’s Jackson Hole conference from August 22-24.

As of August 6, BTC/USD traded at around $55,000, showing some recovery from the recent lows but still under pressure from broader market uncertainties.

The U.S. job market showed significant signs of cooling in July, with the economy adding just 114,000 jobs and the unemployment rate climbing to 4.3%, according to the Bureau of Labor Statistics. This job growth figure fell short of expectations for 175,000 and was a notable decrease from June’s revised figure of 179,000, initially reported as 206,000.

The unemployment rate’s rise from 4.1% in June to 4.3% was also above the forecast of 4.1%. Despite this soft data, the price of bitcoin (BTC) remained relatively unaffected, trading at around $64,500, showing little change from its position before the announcement and from 24 hours earlier.

 

In contrast, traditional markets saw a more pronounced reaction. The yield on the 10-year Treasury fell by 15 basis points to 3.83%, and the two-year yield dropped by 23 basis points to 3.93% – both reaching their lowest levels in over a year. Stock markets did not respond favorably to the job numbers, with Nasdaq futures falling 2.3% and the S&P 500 down by 1.6%.

The dollar weakened by 0.6%, while gold prices surged by 1.3%, hitting a new record high of $2,513 per ounce.

Other aspects of the employment report showed that average hourly earnings increased by 0.2% in July, falling short of the expected 0.3% and down from 0.3% in June. Annually, average hourly earnings rose by 3.6%, which was below the 3.7% forecast and June’s 3.8% increase. Average weekly hours worked also missed expectations, coming in at 34.2 against forecasts of 34.3 and June’s 34.3.

In response to the weaker-than-expected job data, traders are increasingly betting on significant Federal Reserve rate cuts in the coming months. The CME FedWatch tool now indicates a 70% chance of a 50 basis point rate cut in September, up from 22% just a day earlier. For the December meeting, traders are beginning to price in a total of 125 basis points in rate cuts by the end of the year, compared to the previous expectation of 75 basis points.

This shift in market sentiment underscores the broader economic uncertainty and the increasing likelihood of more aggressive monetary easing by the Federal Reserve to support the economy.