Bitcoin (BTC) Sees Decline After Hitting New ATH
Bitcoin (BTC), which reached a new ATH of over $124,000 a few days ago, has been falling ever since. Having reached a new ATH on August 14, BTC continues to experience declines as the above-expectation US PPI data continues to negatively impact investor confidence.
Analysts say the influx of economic data from the US has dampened hopes for a Fed rate cut, strengthened the dollar and increased aversion to risky assets. At this point, Bitcoin has fallen by over 2% in the last 24 hours, dropping to $115,600. Bitcoin’s decline also affected altcoins, with Ethereum (ETH), which had come close to breaking its previous ATH, falling 3% to $4,340, and XRP dropping 4% to $3. Other altcoins also experienced significant declines, with analysts weighing in on the decline and sharing their expectations.
What Do Investors Await for Bitcoin?
Speaking to The Block, Kronos Research CIO Vincent Liu stated that the decline was due to US data and declining investor confidence. “Bitcoin’s recent decline is due to higher-than-expected US inflation and investor behavior that prefers to act cautiously in this environment. Higher inflation is dampening hopes of a Fed rate cut next month, strengthening the dollar and fueling risk aversion. Liu said that US Treasury Secretary Scott’s statement that the government would not purchase new Bitcoin for its strategic reserves further eroded investor confidence and fueled the decline. Liu stated that investors are withdrawing from the cryptocurrency market amidst the negative macroeconomic environment, adding that investors are waiting for a new catalyst and improvement on the FED and macroeconomic front before coming back to crypto.
What are the Critical Levels in Bitcoin? Is the Situation So Bad?
However, BTC Markets Crypto Analyst Rachael Lucas said that the situation is not all bad for Bitcoin and crypto, and that spot ETF data suggests that the market decline is related to capital rotation rather than a collapse. “While daily spot Bitcoin ETF flows have declined modestly overall, institutional participation remains at a moderate level. This shows that investors are turning to lower-cost products rather than exiting the market completely.” Lucas stated that the key support levels for Bitcoin are the $115,000 and $112,500 regions, and that a break below these levels could pose a risk of a drop to $110,000. Finally, Lucas noted that the market’s focus is on the Fed’s Jackson Hole Symposium this week, adding that a moderate tone from the Fed could revitalize risk appetite and initiate an uptrend.
*This is not investment advice.
