Bitcoin Retreats Amid Shrinking Chances of Fed Rate Cuts
This week saw Bitcoin take a step back from its all-time high, settling at $117,760 by August 16th. With a market cap now valued at $2.34 trillion, down from its peak, the cryptocurrency faces headwinds tied to shifting Federal Reserve policies.
Bitcoin’s downward trend coincided with fading hopes for a Federal Reserve rate cut. This shift in investor sentiment was triggered by strong producer price index data, signaling inflation pressures. As a result, traders reassessed the likelihood of Fed intervention in September.
Key points affecting Bitcoin:
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Producer price index climbs to 3.6%, stoking inflation fears.
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Polymarket data reveals a drop in the odds for a September Fed cut from 80% to 70%.
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Concerns loom over potential stagflation due to weak job numbers and soaring inflation expectations.
Fed Chair Jerome Powell emphasizes balancing a robust job market with stable prices, a goal made harder by recent import tariffs raising consumer costs. The latest University of Michigan consumer sentiment data reflects these anxieties, showing a drop in confidence levels.
Technical analysis paints a bearish outlook for BTC. The price chart indicates a double-top pattern with a potential neckline at $112,000. Indicators like the RSI and MACD suggest more pullbacks may occur before renewed upward momentum.
Historically, Bitcoin thrives during periods when the Fed cuts rates or as expectations increase. This relationship coudl play out as investors watch for clearer signs from Fed officials on future monetary policy moves.
