(Kitco News) – Financial markets saw a volatile start to the trading day as all eyes were on Fed Chair Jerome Powell, who is testifying before the Senate Banking Committee on Tuesday and before the House Financial Services Committee on Wednesday.
Prepared remarks from Powell indicate that while the Fed has yet to decide to lower interest rates, he was encouraged by evidence of cooler inflation and that more "good data" would help get the central bank to where it wants to be in terms of inflation.
Powell said the recent inflation readings "have shown some modest further progress” after several hotter readings in the first quarter, “and more good data would strengthen our confidence that inflation is moving sustainably toward 2 percent.”
Bitcoin’s (BTC) price has stair-stepped its way higher since hitting a low of $54,950 near midday on Monday as bulls look to recover ground lost during Friday’s plunge below $54,000.
BTC/USD Chart by TradingView
“Bitcoin has seen a sharp uptick during Asian hours, climbing to $57,381 from a recent low of $55,500 effectively recovering from the 4% decline from the previous day,” said Ryan Lee, Chief Analyst at Bitget Research. “Despite the slight recovery, heightened volatility in the market persists – and what drives it are the concerns over potential selloffs by creditors of Mt GOX.”
“Earlier this week, news around Germany’s rapid liquidation of seized crypto estimated to be $2.2B in Bitcoin through major exchanges also contributed to market uncertainty,” Lee added.
“Bitcoin is trading within the $55,000 to $58,000 range after Monday's decline,” said analysts at Secure Digital Markets. “The German government's recovery of over $200 million worth of Bitcoin from various exchanges has helped to boost sentiment. Despite the recent price drop, some investors see this as a buying opportunity.”
“Historically, July has been a favorable month for BTC, with average returns around 10%,” they noted. “The long-term outlook remains bullish as the supply overhang from Germany and Mt. Gox creditors is expected to diminish, potentially triggering a significant market recovery. Open interest has been increasing, and spot volume has risen this morning, indicating positive market sentiment.”
The analysts said another encouraging sign has been the return of inflows into U.S.-listed spot BTC exchange-traded funds (ETFs). “Bitcoin ETFs saw strong inflows of $294.8 million, led by BlackRock with $187.2 million. There were no recorded outflows yesterday, suggesting continued investor confidence,” they noted.
According to market analyst Arman Shaban, the recent pullback filled Bitcoin’s former fair value gap (FVG), and the top crypto could soon begin to climb higher as long as it maintains the current support levels.
“By analyzing the #Bitcoin chart on the weekly timeframe, we observe that after 2 months, this cryptocurrency finally experienced a drop to fill its old FVG,” Shaban said. “Interestingly, after this FVG was filled, the price managed to rise by 10%, from $53,500 to $58,300!”
“Currently, Bitcoin is trading around $57,200, and if it can hold above the support level of $50,500 to $53,500, we can expect further growth in the price,” he concluded.
TradingView analyst b45bc5 said that based on the daily chart, Monday’s “positive line closed, indicating that the bullish resistance cannot be ignored. The price may continue to rise today, and shorting needs to be cautious.”
“At present, the focus is on the resistance level of 58,500,” he said. “If the price breaks through 58,500, it will continue to rise, and we can wait for a better shorting opportunity. If the price encounters resistance below 58,500 and a downward signal appears, the downward trend will continue.”
In the event that Bitcoin’s price “rebounds to below 58,500 and encounters great resistance, you can sell BTC, with a target of 57,000,” he added. “If the price directly breaks through 58,500, you can wait for a safe shorting opportunity first. I do not recommend going long above 58,500.”
As for stocks, analysts at Secure Digital Markets said traders were looking to “build on [the market’s] previous record-setting performances,” and noted that the June consumer price index is set to be released on Thursday while the producer price index would be announced Friday, with the key inflation data expected to move markets.
