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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.