Waits on key risk event :: InvestMacro

• Bitcoin ↓ over 8% on Monday

• Roughly 2% above $60,000 support

• Over past year US PCE triggered moves of ↑ 0.9% & ↓ 2.3%

• Key point of interest – $60,000

• Technical levels – $60,254.93, $57,5656.20 and $66,365.11

Bitcoin’s extended losses have set off alarm bells for bulls, with prices sinking below $60,000 for the first time since early May!

The world’s largest cryptocurrency collapsed over 8% on Monday thanks to cooling demand for Bitcoin ETFs and uncertainty over US interest rates. Developments revolving around the failed Mt. Gox exchange compounded the overall negativity, allowing sellers to dominate the scene.

Despite prices rebounding in the previous session, sentiment remains fragile with bears on standby to pounce again. In the near term, Bitcoin’s fate may be tied to Friday’s US PCE deflators.

The Fed’s preferred inflation gauge – the Core PCE has the potential to impact bets around when the central bank will cut rates in 2024. Any changes to these expectations may impact cryptocurrencies which have displayed sensitivity to interest rates.

Traders are currently pricing in a 70% probability of a 25-basis point cut in September with a move fully priced in by November.

Fun fact: Over the past year, the US PCE deflators have triggered upside moves of as much as 0.9% or declines of 2.3% in a 6-hour window post-release.

Taking a look at the technicals

With Bitcoins’ weekly price chart showing a potential double top, this PCE report could not be better timed to determine the cryptos’ next course of action- above or below the double top neckline.

Notice how volume declined into the second top of the pattern.

Bitcoin on the daily time frame may be in a potential symmetrical triangle, bouncing off the lower bound trendline (support) on yesterday’s price action.

Interestingly, this bounce off the support area of the symmetrical triangle coincides with an entry and exit out of the oversold zone of the RSI.  

The Relative Strength Index (RSI) is an indicator that highlights overbought and oversold zones.

Key levels to look out for in a decline include:

• $60,254.93 – The neckline area of the potential double-top pattern

• $57,5656.20 – The 200-day simple moving average (SMA)

• $56,457.70 – The lowest price between Bitcoins all time High ($73,711.39) and the most recent swing high ($69,498.98)

In a rally, the following levels are significant points of interest

• $66,365.11 – The 50-day simple moving average

• $71,428 – The upper bound trendline of the symmetrical pattern