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(Kitco News) - The sideways chop in cryptocurrency markets continued on Tuesday as a decline in the U.S. consumer price index (CPI) to 4% year-over-year did little to help spur activity for digital assets, which continue to be weighed down by the Securities and Exchange Commission’s apparent mission to bring the U.S. crypto industry to heel.
The decline in inflation did have a positive impact on stocks, which climbed higher throughout the trading day as investors interpreted the lower CPI reading as a sign that the Federal Reserve will announce a halt to interest rate hikes at this week’s Federal Open Market Committee (FOMC) meeting.
At the close of markets, the S&P, Dow and Nasdaq all finished higher, up 0.69%, 0.43%, and 0.83%, respectively.
Data provided by TradingView shows that Bitcoin (BTC) initially climbed higher after the CPI was released, hitting a daily high of $26,570 before an afternoon sell-off dropped the top crypto to a daily low of $25,835. BTC has since climbed back above support at $26,000.
BTC/USD Chart by TradingView
July Bitcoin futures prices traded higher in the early U.S. trading hours, according to Kitco senior technical analyst Jim Wyckoff, who noted that otherwise, there is “Not much new.”
Bitcoin futures 1-day chart. Source: Kitco
“The bears still have the slight overall near-term technical advantage as a gentle price downtrend is still in place on the daily bar chart,” Wyckoff said. “The path of least resistance for prices is presently sideways to lower.”
According to the latest edition of Technical Roundup, “Bitcoin/Dollar has continued to move lower,” with the price “making lower highs and lower lows on the weekly and daily time frames.”
BTC/USD 1-week chart. Source: Technical Roundup
“This is evidence of weakness,” the analysts said, which in this context can be mitigated in one of two ways.
“First, a break in market structure,” they wrote. “This would require a higher high on the aforementioned time frames, meaning a break back above $28000. Second, by reaching support. This would require (at the very least) price to reach the weekly level closer to $24000.”
BTC/USD 1-day chart. Source: Technical Roundup
At present, neither of these conditions has been met, which means there is nothing making a “compelling case for a reversal,” they said.
“Put simply, the market has been drifting lower and it has been mostly boring and choppy in doing so,” they wrote. “Stepping in front of stair-step price action generally makes for a bad bet. Better setups emerge when the drift becomes impulsive, be it via an aggressive puke into support or an impulsive higher high to reverse the dominant trend.”
Providing deeper insight into their thought process behind the negative outlook, Technical Roundup said, “We cannot have strong counter-trend views in the absence of complementary market structure or at least a strong support level to skew the odds towards reversal.”
Mixed performance for the altcoin market
On the whole, altcoins traded mixed, with a slightly larger proportion of the top 200 tokens trading in the green on the day.
Daily cryptocurrency market performance. Source: Coin360
Stella (ALPHA) was the biggest gainer for the second day in a row, increasing by 14.33% to trade at $0.1125, followed by a 9.5% gain for Galxe (GAL) and an 8.64% increase for Braintrust (BTRST).
The overall cryptocurrency market cap now stands at $1.054 trillion, and Bitcoin’s dominance rate is 47.7%.
