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Bitcoin Rally Stalls, But Long-Term Sentiment Remains Bullish
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- DeepHorus
Bitcoin's recent price rally faltered on Friday, dropping to a low of $76,877 following a hawkish keynote address by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium. The cryptocurrency had earlier in the week touched an intraday high of $81,455, but failed to break through a well-established resistance zone. This pullback erased much of the coin's impressive double-digit weekly gains, closing the day at $77,557, down 3.39%.
The market reaction was directly tied to Warsh's comments, made on his 100th day in office. He emphasized that the Fed still has 'work to do' on inflation before it can consider the job complete, without offering new forward guidance. Traders interpreted this tone as decidedly hawkish, causing a sharp repricing of interest rate expectations. According to CME Group's FedWatch tool, the odds for a September rate hike surged to approximately 56% from about 35% the day prior.
The volatility triggered a cascade of liquidations across the cryptocurrency market. CoinGlass data indicated roughly $481 million in liquidations within 24 hours around the speech. More than $360 million of this total came from long positions that were caught offside by the sudden downturn.
Despite the immediate selloff, technical analysts view the pullback as a consolidation rather than a trend reversal. Key indicators like the Relative Strength Index have cooled from overbought levels, while the Average Directional Index still signals a strong underlying uptrend. The price remains within a bullish structure that began at the June low near $68,858.
The longer-term sentiment, however, remains firmly bullish among market participants. A prediction market on Myriad shows that 77% of bettors are now wagering Bitcoin's next major move will be a push to $84,000, versus just 23% for a drop to $55,000. This bullish outlook has strengthened significantly this month and was not shaken by Friday's events.
Fundamental support for Bitcoin also continues to build. U.S. spot Bitcoin ETFs recorded $2.8 billion in inflows over eight consecutive days through Wednesday, the longest winning streak since April. This institutional demand was partly fueled by the Treasury Department's announcement to double its long-dated bond buybacks starting September 9, which has supported a broader 'debasement trade.'
Looking ahead, the short-term outlook remains cautious. Fed Chair Warsh's decision to avoid forward guidance means markets will receive no clear signals until the next official rate decision. Consequently, Bitcoin's price is likely to remain sensitive to upcoming inflation data releases, which will be closely watched for clues about the Fed's next move.
