The cryptocurrency market reacted mildly to Powell's "dovish" stance, with Bitcoin consolidating below $58,000

Author: Mary Liu, BitpushNews

Federal Reserve Chairman Jerome Powell concluded a two-day semiannual congressional hearing, discussing the current monetary policy. He acknowledged significant progress on inflation but stated that there is no need for inflation to fall below 2% before considering interest rate cuts, and there is no specific inflation number to determine rate cuts.

Market observers widely expect at least two rate cuts in 2024, and Powell's dovish remarks reinforced this expectation. The CME FedWatch tool shows that traders currently believe there is a 75% chance of a rate cut in September, up from 73% yesterday.

The stock market reacted positively to this statement, with optimism driving U.S. stocks to new highs. The S&P 500 and Nasdaq indices both rose for seven consecutive days, reaching all-time highs during intraday trading. As of Wednesday's close, the S&P, Dow Jones, and Nasdaq indices all saw significant gains, rising by 1.02%, 1.09%, and 1.18%, respectively, with the S&P index closing above 5,600 points for the first time in history.

The cryptocurrency market remains in a consolidation phase. BTC rose to a high of $59,500 during Wednesday's early trading but faced downward pressure in the afternoon, falling below $58,000. As of the time of writing, BTC is trading at $57,557, down 0.36% in the last 24 hours.

The altcoin market showed mixed results. Among the top 200 altcoins by market capitalization, SATS (1000SATS) led the gains with an increase of 21.7%, followed by Siacoin (SIA) with a rise of 17%, and Rocket Pool (RPL) with a gain of 13.9%. Dog Runes led the declines, dropping by 5.7%, while Galxe (GAL) and Flare (FLR) both fell by 4.7%.

The overall market capitalization of cryptocurrencies is currently $2.12 trillion, with Bitcoin's market share at 53.4%.

German Government's Coin Sales Coming to an End

On Wednesday, the German government transferred over 10,853 Bitcoins, worth $637.7 million, to various CEX and market maker addresses. According to data from on-chain analysis platform Arkham, the recipients of these transfers include Flow Traders, Coinbase, Kraken, Cumberland DRW, and B2C2 Group, suggesting an intention to sell.

Data shows that as of the time of writing, the German government still holds approximately 15,520 Bitcoins, valued at over $890 million.

Meanwhile, since June 18, when German authorities began transferring funds to exchanges, the price of Bitcoin has dropped by about 17%, briefly hitting a low of $53,500 last week. Several analysts believe that if the German government's addresses continue to transfer at the current pace, their seized Bitcoins could be completely sold by this weekend.

ETF Inflows Remain "Healthy"

Funds flowing into U.S.-listed spot Bitcoin exchange-traded funds (ETFs) have increased, with a total of $654.3 million entering these products over three trading days since July 4.

Despite the inflows being somewhat unstable in recent months after reaching record highs, overall demand for ETFs remains healthy.

Nate Geraci, president of ETF Store, tweeted yesterday: "Just today, the inflow into BlackRock's IBIT has surpassed nearly 90% of the total assets of all 300+ ETFs launched this year. Most ETF issuers are desperately vying for daily inflows of $121 million, while IBIT has already attracted $18 billion in 6 months."

Bloomberg's senior ETF analyst Eric Balchunas stated: "For IBIT, a 'pretty good' day (like yesterday's $121 million) is more than the total assets under management of most ETFs launched this year by the end of the year. About 500 ETFs were launched last year, and more than half of 2024 has passed, with 76% of assets still below $121 million. For new issuers, attracting $100 million in the ETF market is challenging. However, since IBIT's launch, there have been 60 days where it absorbed over $100 million in funds!"

Analyst: BTC Needs to Recapture $60,000 Range Low as Support

Analysts at Secure Digital Markets believe that Bitcoin faces persistent selling pressure after each rebound, with a key level to watch being $60,500. A breakout above this level would indicate a return to bullish territory for Bitcoin.

Regarding Bitcoin's price, market analyst Rekt Capital pointed out that although Bitcoin's price briefly surpassed $59,000 during Wednesday's early trading, it subsequently fell below $58,000, indicating that "Bitcoin is not yet ready to break the downtrend." BTC "needs to recapture the $60,600 range low as support to return to the re-accumulation range it broke through last week."

Market analyst Moustache holds a bullish view, noting that Bitcoin is about to experience a crossover of the 100-day moving average and the 200-day moving average for the first time in its history.

On-chain data from CryptoQuant indicates that Bitcoin is at a critical stage in this market cycle, as several factors suggest prices will continue to decline, while others indicate a potential bottoming out.

Among these, the Bitcoin profit and loss (P&L) index hovers near its 365-day moving average, with previous downward crossovers foreshadowing significant declines that began in May and November 2021, leading to major market corrections. Additionally, the growth of Tether's market capitalization is typically seen as a key driver of bull markets, but it has currently stagnated.

However, data shows that Bitcoin whales are continuing to accumulate at the fastest pace in over a year, with whale holdings increasing by 6.3% this month, marking the highest level since April 2023.

Other positive factors, such as the imminent approval of Ethereum ETFs by the SEC, suggest that despite signs of weakness in the short term, prices are likely to continue rising in the long term. Bitwise Chief Investment Officer Matt Hougan also stated in a report that key positive factors could drive Bitcoin to $100,000 by the end of the year.