Bitcoin fell to $76,877 on Friday, giving back most of this week's gains. The direct cause of the decline was that Federal Reserve Chairman Kevin Warsh emphasized in his speech at Jackson Hole that the pace of inflation reduction is still insufficient, and that the Fed "has more work to do" in fighting inflation.
The market immediately re-priced the interest rate path. CME FedWatch data shows that traders' bets on a rate hike in September increased from 35.4% the previous day to 55.7%. Affected by this, Bitcoin quickly fell from its overnight high of $81,455, once again encountering the resistance range that had previously suppressed its upward momentum, and ultimately closed at $77,557, a daily decline of 3.39%.
Interest rate hike expectations drive up volatility
The fluctuations following the speech quickly spread to leveraged positions. CoinGlass data shows that within 24 hours before and after the speech, the crypto market saw a total liquidation of approximately $481 million, of which over $360 million came from long positions.
This means that short-term funds encountered concentrated stop-losses after chasing rises at high levels. Although Bitcoin did not fall below its previous key support levels, the resistance levels came into effect again, significantly cooling down the market's short-term risk appetite.
Resistance range still not broken through
From a price perspective, this round of decline occurred around the range of $81,000 to $82,500. This area has repeatedly suppressed upward attempts this year, and once again, it has become a short-term watershed.
The article mentions that if the downward trend continues to expand, the range of $73,670 to $75,157 will become the first support level that the market will focus on. If the closing price falls below this range again, both the 50-week moving average and the breakout structure since June could be put to the test.
However, the current decline is more like a consolidation after the rise, rather than a reversal of trend. Bitcoin is still within the upward range since its low of $68,858 in June; it's just that the short-term momentum has slowed down at higher levels.
Long-term bullish bets still prevail
Despite a clear pullback on Friday, the pricing in the forecast market did not significantly turn pessimistic. According to the "Next Move for Bitcoin" market of Myriad, traders are currently betting at about 77% that Bitcoin will rise to $84,000, while the probability of a drop to $55,000 is priced at 23%.
Since the launch of this market at the end of February, the leading position in both directions has switched several times. However, since the beginning of this month, the bullish side has clearly expanded its advantage. The decline on Friday did not change this distribution, indicating that some traders still regard this drop as a short-term fluctuation rather than a reversal of the medium to long-term trend.
An important factor supporting this sentiment is the continuous inflow of funds into spot Bitcoin in the United States. According to the article, as of Wednesday, such products have seen net inflows for 8 consecutive trading days, attracting a total of $2.8 billion, marking the longest consecutive inflow period since April.
In addition, the U.S. Treasury Department announced that it would double the scale of long-term government bond repurchases starting from September 9th. The article argues that this arrangement supported the previously weak long-end bond market and also contributed to a weakening of long-term yields and the dollar, thereby reinforcing the macroeconomic trading logic that led to Bitcoin's rise from around $62,000 to $80,000 this month.
However, in the short term, the market will continue to be influenced by inflation data and the Fed's statements. Warsh This time, no clear interest rate path was provided, but rather an emphasis that the task will not be easily declared completed until inflation significantly falls back towards the target. This means that before the next interest rate decision, Bitcoin may still react sharply to each release of inflation data.
