Key Points
- Bitcoin experienced its lowest weekly close in four months, leading altcoins in a significant downtrend.
- Macro narratives, including the U.S. CPI and PPI data release, are expected to test the resolve of crypto traders.
Bitcoin’s price hit a four-month low last week, with altcoins following its downtrend. The leading cryptocurrency was affected by sell-side pressure due to Mt. Gox repayments and BTC sales in Germany.
On July 6, Bitcoin briefly broke away from the downtrend, reaching a high of $58,472 from a low of $53,717 on July 5. However, the losses resumed on July 7.
Technical Analysis of Bitcoin
Bitcoin’s continued decline has highlighted a double-top setup on the daily chart. This setup typically indicates a bearish reversal, suggesting that the asset’s price may drop after failing to break above a significant resistance level.
At the time of writing, Bitcoin was trading below the 50-, 100, and 200-day exponential moving averages (EMA) on the 4-hour chart, favoring bearish speculators. To mitigate the correction, bulls will need to push the price above the 20-day EMA on the 4-hour chart.
Macro Narratives and Bitcoin
The U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data expected this week could challenge crypto traders. Analysts at Citi Research predict that the Federal Reserve may cut rates by 200 basis points over eight consecutive meetings from September through July 2025.
Lower interest rates could potentially boost riskier assets like cryptocurrencies, as they lower borrowing costs and increase liquidity, encouraging investors to seek higher returns in instruments like cryptocurrencies.
The U.S. M2 money supply has been growing, indicating increased liquidity, which could lead to higher inflation and drive investors towards alternative assets like cryptocurrencies, potentially boosting crypto prices.
The Bitcoin network hash rate dropped throughout June, reflecting miners shutting down due to reduced profitability. This continuous decline suggests that some miners may be scaling back operations.
Historically, miner sell-offs and operational reductions have signaled that prices are near a cyclical low and might soon recover.
