Bitcoin was able to shake off some recent selling after U.S. data supported rate cuts.
BTCUSD – Daily Chart
BTC has found buyers at the $108,350 level, and that is now the key level to watch for the path ahead.
Speculative assets got a boost from the latest U.S. producer price index. The August PPI number eased to 2.6% year-over-year from 3.1% year-over-year in July. That was a positive for markets after a sharp increase a month ago.
Market focus this week will be on trade or tariff news, while the latest U.S. CPI for August is expected to climb to 2.9% from 2.7% in July. The latest easing in inflation gave markets a chance to continue the bullish theme, and they are now pricing in a 100% chance of a 25 basis point rate cut and a 14% chance of a 50 bp rate cut at the upcoming FOMC meeting on September 16-17. The expectation is that the Fed will now cut rates by around 75 basis points by the end of the year.
Crypto data firm Glassnode gave an update on the trend in Bitcoin after the recent consolidation.
“Since the mid-August all-time high, Bitcoin has entered a volatile downtrend, declining to $108k before bouncing back toward $112k,” a Glassnode report said.
“With volatility rising, the central question is whether this marks the start of a true bear market or simply a short-term contraction.”
To answer that question, researchers looked at the price at which the active BTC supply last moved, dividing it into various “quantiles”.
The 0.95 quantile means that 95% of the supply is in profit and is a level of interest.
“At present, the price trades between the 0.85 and 0.95 quantile cost basis, or in the $104.1k–$114.3k range. Historically, this zone has acted as a consolidation corridor following euphoric peaks, often leading to a choppy sideways market”.
“Therefore, breaking below $104.1k would replay the post-ATH exhaustion phases seen earlier in this cycle, whereas a recovery above $114.3k would signal demand finding its footing and reclaiming control of the trend”.
Further price levels being watched are the aggregate buy-in level for Bitcoin speculators, also known as short-term holders (STHs). This is buyers holding coins for up to six months. Glassnode states that STH profitability changes quickly around price fluctuations.
“The percentage of short-term holder supply in profit provides a clear lens on this dynamic”.
“With the leg down to $108k, their share in profit collapsed from above 90% to just 42%, a textbook cooling-off from an overheated state to a zone of sudden stress”.
Bitcoin is being supported by the expectation for rate cuts, but “risk-on” markets are still elevated and run the risk of a sharp correction like we saw in February to April.
