Bitcoin struggled to hold above $115,000 on Thursday, trading near $113,700 as the 50-day moving average acted as a resistance level. The broader cryptocurrency market saw a modest 1% increase, reaching a total capitalization of $3.86 trillion. Analysts viewed this as a minor bounce rather than a significant recovery.
Market sentiment was dampened by the ongoing pressure on the technology sector in traditional financial markets, which also affected cryptocurrency buyers. The failed attempt by Bitcoin to break above $115K highlighted the overall weakness in the market. Additionally, outflows from Bitcoin and Ethereum ETFs were observed, with Bitcoin ETFs experiencing net outflows of $523 million on August 19, followed by $311 million and $192 million on the subsequent days. Similarly, Ethereum ETFs saw outflows of over $500 million during the same period, reversing the inflows from the previous week. Analysts attributed this weakness to profit-taking and liquidations following Bitcoin’s recent record high.
In other news, the SEC launched an investigation into Alt5 Sigma after its $1.5 billion deal with World Liberty Financial, a company linked to former U.S. President Donald Trump. Ethereum’s on-chain metrics also showed a decline, with active addresses dropping by 28% since July 30. ETH was trading at $4,289, up only 0.4% for the day but down more than 7% from its recent peak. The decrease in active addresses indicated reduced retail participation and could limit short-term upside potential even if Bitcoin stabilizes.
XRP and Solana exhibited similar trends, with XRP falling to $2.87 and Solana at $183. Both tokens experienced more than a 6% decline over the past week, mirroring Bitcoin’s weakness. Traders speculated that a dovish stance from the Federal Reserve could trigger short-term rebounds, but without new inflows, any recovery might be constrained.
Derivatives markets reflected hedging pressure, with the 30-day delta skew in Bitcoin options reaching a four-month high of 12%. This indicated a demand for downside protection among investors. While macroeconomic factors were primarily driving Bitcoin’s weakness, some analysts believed that the market was nearing the later stages of the bullish trend. They were uncertain whether the current pullback signaled a broader trend reversal or just a correction on the path to a final peak.
Looking ahead, traders awaited Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday, which could influence risk assets. A dovish tone from Powell might alleviate pressure on markets, while any reluctance to endorse cuts could further push Bitcoin down from its recent highs. Despite the short-term concerns, some analysts remained optimistic about longer-term catalysts. Bitwise suggested that U.S. pension plan allocations could propel Bitcoin to $200,000 by year-end, potentially surpassing the impact of spot ETF approvals.
In conclusion, while the immediate outlook for Bitcoin and the broader cryptocurrency market seemed uncertain, market participants were closely monitoring external factors and upcoming events for potential market direction.