Bitcoin Faces Potential Peril as It Slips Below $108,000 Mark
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The Federal Reserve's preferred inflation gauge, the core PCE Price Index, saw a significant increase in July, reaching a yearly total of 2.9%. This marks the highest yearly increase since February, causing a ripple effect in the markets.
As investors await the US non-farm payrolls data to gauge the Fed's potential move on interest rates this month, the cryptocurrency market is experiencing a downturn. Bitcoin, along with other leading cryptos, has extended its slide over the weekend, with Ether's key support currently at $4,000.
The price of Bitcoin fell almost 4% last week, and the market mood is bearish due to a string of large-scale sell-offs by Bitcoin whales and the liquidation of leveraged holdings. The persistent fear of another whale dumping a billion dollars' worth of BTC into the market is adding to the caution exercised by investors.
One such event occurred recently, with one significant Bitcoin whale holder selling over 100,000 Bitcoins, causing a price drop from around $114,000 to $108,600. However, by Thursday night, the price of Bitcoin recovered to $113,500, almost close to its pre-disaster value.
The inflation figures are weighing on sentiment, despite Fed boss Jerome Powell hinting at a rate cut this month. The market is pricing in the possibility that the Federal Reserve might start cutting rates in late September or early October, with the CME Group's FedWatch Tool showing a large 87.6% chance of a 25 basis point rate drop at the September meeting.
The pace of inflation is a concern for investors, adding another layer of complexity to the market dynamics. This week's market dynamics could be shaped by two major macroeconomic events: a US bond auction on Tuesday and the US non-farm payroll (NFP) release and unemployment figures on Friday.
The sentiment among investors is influenced by several elements, such as significant sales and transfers of Bitcoin from large, dormant wallets. A major Bitcoin trader recently converted their Bitcoin holdings into Ether, contributing to increased demand for Ether while exerting downward pressure on Bitcoin's price.
The critical psychological support for Bitcoin is positioned at $100K, indicating a delicate liquidity situation. Bitcoin is currently navigating difficult conditions as it tries to hold a position above $108,000. As the market continues to evolve, investors will be closely watching these developments to make informed decisions.
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