As of press time, Bitcoin (BTC), the most prominent cryptocurrency in the world, is presently consolidating at $64,000, having recovered significantly from its lows of $57,000 last week. The price of Bitcoin has mainly stayed range-bound since the fourth Halving of the previous month.
Price Capitulation of Bitcoin
The dark blue circle indicates that, according to cryptocurrency analyst Rekt Capital, Bitcoin has just finished a price-based capitulation phase known as the Halving Retrace phase. The ongoing Re-Accumulation phase (red) will bring about time-based capitulation, which is the goal moving ahead.
Rekt Capital argues that a consolidation period lasting over 150 days after the Halving is in keeping with historical pricing patterns. Given that it slows down the rate at which the price of Bitcoin is increasing, a protracted consolidation phase is likely advantageous for the cycle.
Anticipating the extended consolidation period to realign the current cycle with historical patterns observed after previous Halving events, we view resynchronization as a favorable development for Bitcoin’s long-term stability and growth in the market.
Bitcoin has satisfied the price-based capitulation offered by the Halving Retrace phase (dark blue circle)
Now it’s all about the time-based capitulation that the current Re-Accumulation phase (red) will now offer going forward
A 150+ day post-Halving consolidation… pic.twitter.com/bBbCRKrtxY
— Rekt Capital (@rektcapital) May 5, 2024
But since then, Bitcoin’s growth has slowed, and for almost two months, its price has fluctuated between roughly $60,000 and $70,000. Compared to previous patterns, this prolonged consolidation period has slowed the cycle’s acceleration, decreasing days to 210 days.
Fed’s Reduction in Interest Rates May Provide a Push
Growing speculation about a possible rate cut by the Federal Reserve has supported the price of bitcoin, with markets now pricing in a higher chance of a 25 basis point drop in September. The recent shift in public opinion has helped cryptocurrencies, which usually do well in environments with low-interest rates and lots of liquidity.
Signs of a softening labour market raise the possibility of a rate cut, giving the Fed more reason to contemplate monetary easing. However, this development follows a string of robust payroll reports over the past five months, underscoring the complexity of the economic landscape. Additionally, the Fed’s primary indicator of inflation, which is above the bank’s 2% annual objective, makes decision-making much more difficult.
Later in the week, Thomas Barkin, John Williams, and Neel Kashkari, members of the Federal Open Market Committee (FOMC), will deliver remarks, further illuminating the Fed’s stance on monetary policy.
