Bitcoin (BTC) Price Stalled Below $58,000 Despite Bullish Market Conditions

Bitcoin's price has been stuck below $58,000 for a long time. Despite being in a bull market, Bitcoin isn't moving up, and both market and non-market factors are to blame.

Bitcoin’s price has been stuck below $58,000 for a long time. Despite being in a bull market, Bitcoin isn’t moving up, and both market and non-market factors are to blame.

Impact of US CPI

The US Consumer Price Index (CPI) rose by 3% in June. This is a key metric that measures the price changes for a basket of goods and services. Higher inflation is generally considered to be bullish for Bitcoin, as it serves as a hedge against inflation and can attract investors seeking to preserve the purchasing power of their capital. However, despite the rising inflation, Bitcoin’s price has remained largely stagnant.

One possible explanation for this is that the market may be anticipating a response from the US central bank, the Federal Reserve (Fed). If the Fed raises interest rates, it could lead to higher returns on fixed-income investments, reducing the incentive for investors to allocate funds to riskier assets like Bitcoin. Conversely, if the Fed cuts interest rates, it could benefit Bitcoin by driving investors to seek higher-yielding investments.

According to Chris Larkin, managing director of trading and investing at E-Trade, the data brings the market “one step closer to a September rate cut,” especially considering that real average hourly earnings for workers slowed by 3.9% from the prior year.

The labor force participation rate also increased slightly, from 62.5% in May to 62.6% in June. Despite the data pointing to higher odds of rate cuts, with a 90% consensus for at least one 0.25% rate cut by September, Bitcoin’s price remains below $60,000.

Meanwhile, the S&P 500 stock market index is 0.5% below its all-time high, and gold is trading 1.2% below its $2,450 record high from May 2024. Even the Russell 2000 small-cap index, which excludes the 1000 largest US-listed companies, rose 3% on July 11.

German Government BTC Sales

Another factor that may be contributing to the lack of movement in Bitcoin’s price is the ongoing sale of bitcoins by the German government.

In 2013, German authorities seized nearly 50,000 bitcoins, valued at around $3 billion at the time, from a fraud case. Since then, the government has been gradually selling off these bitcoins to generate revenue.

According to Watcher Guru, the German government now has only $285 million worth of BTC left, having sold the majority of the confiscated coins.

Price Analysis

Due to these issues, the market feels like a bear market despite being in a bull market. BTC is currently trading at $57,412, with an RSI value of 48.30.

The Bitcoin chart shows a big rejection at $59,500, a strong resistance zone where the MA100 is also located. This 3.87% fall pushed BTC back into the triangle zone, indicating that bears are currently holding a strong base.

Bitcoin’s market cap has dropped to $1.1 trillion, which worries investors. However, sources suggest that while retail investors face selling pressure, BTC whales and sharks are accumulating.

Once the German government finishes selling its BTC and the Mt. Gox repayment pressure eases, the market might stabilize. It could take another 1-2 months for everything to settle down.

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