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Bitcoin (BTC) investors are hopeful for a new all-time high, but the actual demand for BTC is rapidly declining. One group of investors, however, might still prevent a significant price drop.

Declining Demand for Bitcoin

Since the start of August, Bitcoin’s price has struggled to break above $60,000. This ongoing stagnation is delaying the recovery from the losses many investors suffered in the July crash. The cryptocurrency’s price movement is currently forming a broadening ascending wedge, but breaking out of this pattern is taking longer than expected. The primary reason for this delay is the drop in demand for BTC among investors.

According to an exclusive report from CryptoQuant, shared with BeInCrypto, large Bitcoin holders, often referred to as “whales,” have significantly reduced their holdings. The report highlights that the 30-day percentage change in whale holdings has plummeted from 6% in February to just 1% now. This reduction in holdings suggests that big players in the market are losing interest, which could further suppress Bitcoin’s price.

Bitcoin’s Path to Recovery

However, if Bitcoin manages to surpass $65,000, it could trigger a breakout above $71,500. This would potentially push BTC past its all-time high of $73,800, invalidating the current bearish-neutral outlook and sparking a new rally.

US stocks have been making a strong recovery after last week’s sharp decline, triggered by the Japanese carry trade unwind. While the market isn’t out of the woods yet, a positive Consumer Price Index (CPI) report expected later today could continue to fuel the rally. If that happens, Bitcoin (BTC) may well follow suit.

Recovery Follows the Bloodbath

Just over a week ago, the US stock market opened to a bloodbath on Monday, following the sudden unwinding of the Japanese yen carry trade. This event sparked fears that the long-anticipated recession might finally be taking hold.

The S&P 500 dropped around 8%, while the tech-heavy Nasdaq plunged more than 10%. Leading stocks, known as “The Magnificent 7,” suffered significant losses, with Nvidia (NVDA) falling 24% and other large-cap stocks losing at least 10%.

However, by the end of that Monday, recovery signs emerged, and the market has generally been on an upward trajectory since. If today’s CPI data is favorable, stocks could return to their pre-Japan crash levels by the end of the week.

Nasdaq About to Break the Downtrend?

Looking at the Nasdaq 100 Index, there’s a chance it could break the current downtrend today, depending on the CPI data. If the index can push through the resistance at $19,535, it would form a crucial higher high. This move could set the stage for the Nasdaq to head back to its all-time highs, potentially bringing the crypto market along with it.

Bitcoin’s Late Summer Breakout?

Bitcoin’s daily chart shows a similar v-shaped recovery, much like Nvidia. Currently, BTC is up 24% from its recent low. However, it still faces significant resistance at $61,000, followed by the 0.618 Fibonacci level at $62,000. The next targets would be $63,000 and $65,000 at the 0.786 Fibonacci level.

If the annual core inflation rate drops to 3.2%, the chances of the Federal Reserve cutting interest rates by 50 basis points in September will improve. While the economic outlook remains uncertain, and a black swan event is still possible, increasing global liquidity is creating a more favorable environment for Bitcoin. A late summer breakout could be on the horizon.

The crypto market faced a sharp downturn over the weekend, led by a slide in Bitcoin (BTC) that triggered widespread selling across major cryptocurrencies. With markets lacking a clear direction, traders are closely watching traditional finance markets for cues on positioning.

Bitcoin and Ethereum ETFs Experience Outflows

Bitcoin dropped 4.8% in the past 24 hours, trading just above $58,500 as of Monday morning in Asia. Ether (ETH) also suffered, losing 3.5%. U.S.-listed exchange-traded funds (ETFs) tracking these assets reflected the broader market’s uncertainty, with BTC ETFs seeing $89 million in outflows, while ETH ETFs recorded $15.7 million in outflows.

Major Cryptos Follow Suit

The selloff extended beyond Bitcoin and Ethereum. Solana’s SOL and Toncoin (TON) led the losses among major cryptocurrencies, each sliding 7%. Binance’s BNB dropped 3%, Dogecoin (DOGE) fell by 6%, and both Cardano’s ADA and XRP declined by 5%.

Additionally, tokens from blockchains Aptos (APT), Arbitrum (ARB), and The Sandbox’s SAND saw drops of up to 7%. These declines were influenced by upcoming token unlocks that are expected to release over $120 million worth of these tokens into the market, creating potential selling pressure.

Traditional Market Events to Watch

This week, key traditional market events could influence crypto prices. Both the U.K. and the U.S. will release July’s Consumer Price Index (CPI) readings on Wednesday. Australia’s consumer confidence and Japan’s Producer Price Index (PPI) are set for release on Tuesday. Later in the week, major companies like Alibaba Group and Walmart will report earnings, while Hong Kong and Taiwan will publish updated GDP figures on Friday.

These traditional market releases often impact crypto prices, as they provide insights into spending behavior and the broader economy. Positive economic data tends to boost investor confidence in riskier assets like cryptocurrencies, while disappointing data could drive investors toward safer options, potentially leading to further declines in crypto markets.

Bitcoin (BTC) is bouncing back after last weekend’s sell-off. The price is climbing, currently battling resistance around $57,000. Can BTC break through to the next target at $61,000?

The bulls have regained control. After hedge funds sold Bitcoin to exit their yen carry trade positions, BTC has surged by 16.5% from its $49,000 low. This suggests a potential V-shaped recovery. Now, BTC is trading just over $57,000, facing tough resistance.

Short-Term Resistance and Potential Rejection

In the short term, BTC faces horizontal resistance and a downward-sloping trend line from the previous $70,000 peak. The stochastic RSI indicates it might top out soon. This could lead to a price rejection and a dip possibly back to $52,000.

Bullish Weekly Candle Close?

On the weekly chart, Bitcoin’s recovery is more apparent. Long wicks on the candles show strong buying whenever prices drop. The current wick is the longest, hinting at robust support.

However, we must wait for the weekly close to confirm this. If BTC closes around this level, forming a hammer or dragonfly doji candle, it could signal bullish future action. The stochastic RSI, which recently crossed down due to heavy selling, is another factor to watch. If it crosses back up, it could support a bullish trend.

After a dramatic plunge on Monday, Bitcoin (BTC) fell to $49,300. By Tuesday, it had bounced back to $56,000. The big question now is: will this recovery continue, or is it the start of a bear market?

Crypto Trading’s 24/7 Nature: A Double-Edged Sword

Bitcoin and cryptocurrencies trade 24/7, a significant advantage over traditional markets. However, this non-stop trading also exposed a vulnerability over the weekend.

The Impact of Japan’s Interest Rate Hike

Japan’s central bank recently raised its interest rate by 25 basis points. This was only the second rate hike since 2007. This increase affected the “Yen carry trade,” where hedge funds borrow at low Japanese rates to invest in higher-yielding U.S. assets. The rate hike made this strategy less profitable, causing hedge funds to unwind their positions.

Weekend Sell-off in Cryptocurrencies

With traditional financial markets closed over the weekend, hedge funds needed liquidity to close their carry trades. Cryptocurrencies became the only sellable assets, leading to Bitcoin’s crash.

USD/JPY Holds Support Amid Market Turbulence

The USD/JPY pair saw a significant drop, favoring the yen and weakening the dollar. However, it found support around 145 JPY. While the carry trade unwinds, major stock markets are now open, and Monday saw a massive $6 trillion sell-off in traditional assets.

Federal Reserve’s Possible Response

There were rumors of an emergency meeting by the Federal Reserve to raise rates immediately. However, this move seems unlikely, as it could be seen as a sign of desperation.

Bitcoin’s Strong Bounce

Bitcoin showed a significant recovery from its low of $49,300. Strong support exists between $51,000 and $52,000, stemming from previous bull markets. If BTC ends the week above $55,600, the recovery might continue. Conversely, if it falls below $51,000, the next strong support is between $41,000 and $43,000, with the bull market trend line being the last defense.

Conclusion

Bitcoin’s recovery to $56,000 offers hope, but the market remains volatile. Investors should watch key support levels to gauge the future direction.