Bitcoin unlikely to see large-scale rally in the short term: Analysts expect a dip test, with prices potentially reaching the $53,000-$54,000 rangeDespite the July Consumer Price Index (CPI) rising 2.9% year-on-year and inflation easing for the fourth consecutive month, the market widely expects the Federal Reserve to begin cutting interest rates next month, which briefly pushed Bitcoin to $61,500
Bitcoin unlikely to see large-scale rally in the short term: Analysts expect a dip test, with prices potentially reaching the $53,000-$54,000 range
Despite the July Consumer Price Index (CPI) rising 2.9% year-on-year and inflation easing for the fourth consecutive month, the market widely expects the Federal Reserve to begin cutting interest rates next month, which briefly pushed Bitcoin to $61,500. However, it quickly plunged below $59,000. Based on analysts' views and indicator data, a large-scale rally in Bitcoin is unlikely in the short term.
Outflows and seasonal weakness: Double pressure on the crypto market
Cryptocurrency analytics firm IntoTheBlock pointed out that over $1 billion worth of USDT was withdrawn from cryptocurrency exchanges on August 13 alone, marking the highest single-day outflow since May. The firm's analysts stated that such massive outflows usually lead to short-term declines in Bitcoin, indicating that investors are actively taking risk-averse measures, moving funds to safer environments like cold wallets to navigate market volatility.
On the other hand, seasonal weakness is also unfavorable for the cryptocurrency market. Coinbase analysts noted that the crypto market typically experiences a decline in trading sentiment and a crash in mainstream coin prices during August. Data compiled by CoinGlass also reveals that August and September are traditionally bearish months for Bitcoin. Since 2013, Bitcoin has seen an average decline of over 8% in August and around 5.5% in September.
Cold market sentiment: Bitcoin may repeat last year's August performance
Highly regarded cryptocurrency analyst MilesDeutscher pointed out that Bitcoin's current price trajectory resembles that of last August. At the time, Bitcoin fell from the top of the $30,000 range to $24,000 and remained range-bound for two months before starting to rebound in October. He noted that retail interest is rapidly waning, current market participants are indifferent, and a clear narrative is absent, which brings to mind market conditions from last August to October.
Market makers plotting a dip test: Targeting the $53,000-$54,000 range
Some believe that Bitcoin market makers are plotting a dip test. The recent FUD events in the market have failed to effectively trigger panic among market retail investors, suggesting that market makers need to take further action.
The first FUD event involved news about WBTC, but market retail investors did not experience significant panic. The second FUD event involved sensationalizing the Mt. Gox transfer, but the market remained unconvinced.
Analysts believe that to test the market, market makers must initiate another dip. This test is not merely intended to liquidate leverage; its primary purpose is to gauge market depth and pave the way for future institutional participation. To maximize efficiency, market makers may leverage FUD events to accelerate market declines and reclaim some blood-stained chips.
This dip is expected to be shallow. Market makers are incapable of, and have no need to, invest significant capital in a market crash. Bitcoin is projected to reach the $53,000-$54,000 range.
Conclusion
Based on multiple perspectives, a large-scale rally in Bitcoin is unlikely in the short term. The market faces headwinds such as outflows, seasonal weakness, and cold market sentiment. Additionally, market makers may be planning a dip test targeting the $53,000-$54,000 range.
Disclaimer: The above analysis is for informational purposes only and does not constitute investment advice. Investing involves risk, and investors should exercise caution.
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