Bitcoin Stuck in a Rut Below $60K as Investors Wary of Fed Chair Powell's Dovish Comments

Bitcoin is at $59,250, 3.5% down from seven days ago and still stuck in the same range it has been in since February.

Bitcoin price analysis reveals a 3.5% decrease over the past seven days, with the cryptocurrency remaining within a tight range since February. Despite hopes of a sustained bull market above the previous all time high of $69,000, Bitcoin faces potential downside risks.

After a sudden 6% drop at Tuesday’s market close, wiping out gains following Federal Reserve Chair Jerome Powell’s dovish pivot and a brief surge after RFK Jr.’s endorsement of Trump, Bitcoin recovered from a low of $58,200 to trade above $60,100. However, by Wednesday, most of these gains had dissipated, leaving Bitcoin trading around $59,250.

Investors Wary as Bitcoin Price Drops

Highlighting the market sentiment, the Bitcoin futures market annualized premium of one-month futures contracts fell below the neutral 5% threshold on August 27, hitting its lowest since October 2023. This bearish outlook among traders was accompanied by a 4% decrease in the total open interest for Bitcoin futures, reaching 517,430 BTC as per Coinglass data.

Moreover, $102 million in forced liquidations of leveraged Bitcoin longs over 48 hours—a small sum compared to the $311 million liquidated during the August 5 crash—showed that major investors' positioning remained largely unchanged despite the recent price drop, which did however increase traders' risk aversion.

Declining Network Activity Dampens Enthusiasm

In other news, declining network activity on Bitcoin dampened investor enthusiasm amidst a challenging macroeconomic landscape. Recent metrics indicate a noticeable drop in usage, with the number of active addresses on the Bitcoin network reaching its lowest point in two months. Despite potential accumulations by larger investors and institutions, this reduction—often linked to decreased retail participation—does not indicate a broadening of Bitcoin adoption.

Data from Glassnode revealed that there were 668,732 active addresses engaged in sending or receiving Bitcoin for the week ending August 26, a 4% decrease from the figures reported two weeks prior. This downturn in active addresses is viewed as a precursor to diminished investor interest, particularly among casual and smaller-scale participants.

Furthermore, the median transaction volume on Bitcoin also decreased, falling to 0.00376 BTC, the lowest recorded since December 2023. This decline further emphasizes the reduced activity level and smaller transaction sizes being processed on the Bitcoin network.

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