BTC Volatility Returns

It’s been a volatile period for Bitcoin recently. A 12% drop at the end of last week saw the market suffering its 5th largest single-day loss as traders reacted nervously to rising US yields. However, a shifting backdrop this week has allowed for crypto assets to recover some of those losses. Yesterday’s almost 4% gain pulled the market off the lows and has reinvigorated hopes for a comeback.

SEC Impact

With the SEC prolonging the decision to approve or a deny proposed Bitcoin ETFs, traders have grown wary and speculative capital that had rushed back into BTC has been redeployed elsewhere. News earlier this year of BlackRock applying to launch a Bitcoin ETF was a major boost for the market. However, with progress having stalled, focus has turned back to macro drivers where USD movement and Fed expectations remain key.

Shifting USD View

On the back of some US data weakness this week, however, the outlook has improved somewhat. USD and US yields have come under pressure and with chances of a September rate hike looking to have faded a little, BTC has room to gain further ground, particularly if Powell downplays hawkish risks when he speaks on Friday.

Technical Views

Bitcoin

The sell off saw BTC breaking down through the bullish trend line from YTD lows and through support at the 27415 level. However, the decline stopped short of testing support at 24930 and price has since started to rebound. The key test will be whether price can get back above 27415, alleviating near-term bearishness.