(Kitco News) - Bitcoin (BTC) and the wider cryptocurrency market experienced slight gains in trading on Tuesday amid a bout of bad economic data in the U.S., including the lowest Purchasing Managers Index (PMI) print since May 2020.
Activity in the crypto market remains relatively subdued ahead of Friday’s Jackson Hole meeting, with BTC trading in a range between support at $20,900 and resistance at $21,700 and showing no signs of an impending breakout. At the time of writing, Bitcoin is trading at a price of $21,500.
BTC/USD 4-hour chart. Source: TradingView
As noted in the morning Bitcoin brief from Kitco’s senior market analyst Jim Wyckoff, “Bears have the slight overall near-term technical advantage as a two-month-old price uptrend on the daily bar chart has been negated. Prices this week are pausing as bulls work to stabilize the market after the recent selling pressure. More sideways price action this week would begin to suggest a near-term market bottom is in place.”
What to expect from Jackson Hole
The flat action in the market since August 19 indicates that “investors remain on the sidelines for now,” according to David Lifchitz, managing partner and chief investment officer at ExoAlpha. This is actually a good sign for Lifchitz, who noted that the recent selloff could have seen BTC dip all the way to support at $19,000.
Lifchitz added that Bitcoin is “not out of the woods yet,” noting that actions from the Federal Reserve have “been driving the price action this year.” With the Fed’s annual meeting at Jackson Hole scheduled for this coming Friday, any major revelations are likely to have an effect on crypto prices.
“So far, markets have been hoping (and have positioned for) a dovish Fed, but the Fed mentioned that its highest priority is to get inflation back down, and not pleasing the markets,” Lifchitz said. “The next Fed decision on rates is on Sep.21st, but it could also announce an intermediate rate hike at the Jackson Hole meeting or shortly after.”
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Based on the state of the economy, which is still experiencing decades-high inflation, Lifchitz suggested that “a hawkish Fed at J. Hole is more probable than a dovish one, which would push the US Dollar index higher, especially as the FED has taken the lead on its peers about hiking rates (especially the BCE).”
Markets must wait. There is not much participants can do until Powell makes his speech on Friday. “Powell's speech will be key: He will try to get his point with just some talks but if results are not happening, then he won't have any choice but to act,” Lifchitz said.
“I (personally) expect more potential downside toward $19k (-10%) than upside to $25k (+17%) from the $21,300 level we are at now, but then again, what really matters is how the market perceives Powell’s speech.”
Altcoins follow Bitcoin’s lead
Tuesday’s dip in the DXY had an overall positive effect on the altcoin market, with a majority of tokens in the top 100 in the green for the day.
Daily cryptocurrency market performance. Source: Coin360
The biggest gainers for the day include a 23.13% gain for Chilliz (CHZ), a 15.1% gain for Optimism (OP), and a 12.57% increase for Curve DAO Token (CRV).
The overall cryptocurrency market cap now stands at $1.034 trillion, and Bitcoin’s dominance rate is 39.8%.
