Bitcoin Price News: BTC’s Latest Recovery is Deceptive – Here’s Why

Bitcoin (BTC) has managed to bounce off the $60,000 threshold once again, but the risk of a drop below that mark continues to be very real.

The macroeconomic landscape has suffered a tectonic shift recently, primarily as the U.S. Federal Reserve has just experienced a change in leadership.

Kevin Warsh just delivered his first presser as the head of the central bank, and his attitude and comments were more hawkish than expected.

Warsh’s tone regarding inflation seems to suggest that he will take any actions necessary to keep inflation in check.

Net Outflows From Bitcoin ETFs Slow Down

At a point when the annualized inflation rate has more than doubled the Fed’s 2% target, the market is expecting a rate hike in the following months of as much as 50 basis points.

In its latest market update, analyst James Butterfill from CoinShares confirmed that Bitcoin remains highly sensitive to changes in the dot plot — a map provided by Fed officials regarding how rates may evolve over time.

“The Fed kept the policy rate unchanged at 3.5% to 3.75%, but this was not a dovish hold. The statement stressed that activity remains solid, uncertainty is elevated because of the Middle East conflict, and inflation is still above target partly because of energy-related supply shocks.”

However, Butterfill emphasized that the “structural” case for BTC could in fact be more bullish than ever as the new head of the Fed seems unwilling to provide guidance for the markets, which increases the top crypto’s appeal as an independent and fully decentralized store of value.

Net outflows from Bitcoin ETFs have been declining recently, indicating lower selling pressure following the end of the war with Iran.

Although tensions in the Middle East persist, the market seems to be less scared about the future and more willing to resume the accumulation we saw in April-May this year rather than distributing again.

Last week, investors withdrew $228 million from these products, representing an $80 million decline compared to the week before, even though the markets were closed on Friday.

Weekly Buy Signal is Still in Play as Long as BTC Stays Above $60K

We have emphasized in previous BTC price prediction articles that this latest bounce off $60,000 is consistent with the behavior of a powerful buy signal that has yielded impressive results over the last 8 years.

If BTC starts rallying to $70,000 or higher over the next few days, that would confirm that this signal is still in play and should mark the end of this bearish cycle.

However, these macroeconomic headwinds could still plunge BTC to $50,000 if the $60,000 support area is lost. However, we believe that this should be the token’s ultimate cycle bottom if that happens.

Heading to the daily chart, we have not yet received a buy signal after this support bounce. Until we do, this is still a normal technical bounce as BTC is coming out of oversold levels in the Relative Strength Index (RSI). Hence, the risk of a bearish breakout is still high.