Crypto billionaire Arthur Hayes, co-founder of BitMEX, expects a recovery in the crypto market as US dollar liquidity increases. Hayes recently closed his short position on Bitcoin, making a 3% profit from the market’s recent decline. He now predicts a potential rebound in Bitcoin prices next week, revising his previous forecast of Bitcoin dropping below $50K.
Veteran trader Peter Brandt also suggests Bitcoin could see bullish momentum, noting the formation of an inverted head-and-shoulders pattern, which is typically a strong bullish indicator for the cryptocurrency.
Rising Optimism Despite Inflation Data
Market sentiment has shifted slightly from “extreme fear” to “fear,” as reflected by the Crypto Fear & Greed Index, which rose from 23 to 29. However, traders remain cautious ahead of key economic data releases this week. The Consumer Price Index (CPI) is set for release on Wednesday, and the Producer Price Index (PPI) will follow on Thursday. These figures could impact market conditions, especially given concerns about inflation and the possibility of further interest rate cuts.
CPI and PPI Data Could Shape Bitcoin’s Next Move
Despite improving sentiment, uncertainty looms over whether Bitcoin and the broader crypto market will recover. Wall Street analysts expect the CPI to cool to 2.6%, down from 2.9%. This slowdown in inflation, combined with a weaker labor market, might prompt the Federal Reserve to cut interest rates by 50 basis points (bps) in September. The CME Fed Watch tool shows a 70% probability of a 25 bps rate cut, with the potential for further cuts totaling 100 bps by the end of the year.
While the US dollar index (DXY) has bounced back above 101, the 10-year Treasury yield dropped to a 15-month low at 3.716%, favoring Bitcoin’s price.
Technical Indicators Point to Bitcoin Rally
According to analysis from CoinGape, there’s a strong chance Bitcoin could rally in the coming days. Traders are closely monitoring the 50-week EMA (Exponential Moving Average), which has historically been a key support level during previous bull markets in 2020 and 2021. If Bitcoin rebounds from this level, it could set off a new bull run.
Currently, Bitcoin is trading around $54,300 and encountering resistance. A breakout above the descending trendline could push BTC to $57,000, especially if it crosses the 0.236 Fibonacci retracement level at $55,508.
