Bitcoin failed to retake $11,500 on August 27 as nervousness over US economic policy dictated a slide across macro markets.
Data from price trackers including CoinMarketCap showed weakness continuing in BTC/USD overnight on Wednesday.
After a brief run to 24-hour highs of $11,530, downward momentum took hold again, with the pair sinking to lows of $11,340. At press time, $11,370 formed a focal point as traders both within and outside cryptocurrency closely eyed macro developments.
Macro bets on Fed inflation overshoot
As Modern Consensus reported, Thursday features a key speech from the US Federal Reserve, with chairman Jerome Powell tipped to unveil a policy shift which would allow inflation to run above the bank’s 2% target.
This would allow years of more permissive stance from the Fed, which aims to keep the US economic on track following coronavirus.
Nonetheless, higher inflation would provide a boon to safe haven assets, analysts previously said, and Bitcoin could benefit as a result.
The past two months saw rises in both Bitcoin and precious metals, as the US dollar currency index hit two-year lows. The status quo changed in mid August, and an above-target inflation policy may already be “priced into” the weak dollar.
“Given that the consensus view is already on the dovish side, it would be difficult for Powell to beat the current expectations,” Mohit Kumar, a managing director for interest rate strategy at U.S. investment bank Jefferies, told UK mainstream media outlet The Guardian prior to the speech.
“Risks that the Powell’s tone, though dovish, fails to live up to current market expectations, which could be negative for risk sentiment.”
Fidelity launches Bitcoin fund
Bitcoin investors lost 3.4% over the last week, with the chances of overcoming $12,000 resistance looking increasingly slim in the short term.
In a fresh update on Thursday, trader Michaël van de Poppe confirmed that he was looking for a drop to around $10,200, with a possible wick down as low as $9,600. This would occur should the current corridor disintegrate and BTC/USD start falling much beyond $11,200.
“…We’re holding the support here; we got a pretty heavy dropdown and now some consolidation,” he summarized.
Beyond the markets, bullish signals about long-term Bitcoin commitment continued, with asset management giant Fidelity revealing it had filed for a new Bitcoin fund.
Famous for its interest in BTC and blockchain technology, the news about Fidelity buoyed commentators, with quant analyst PlanB among them.
About MicroStrategy, which adopted Bitcoin as a treasury reserve asset in July and purchased 21,454 BTC, he added on Thursday:
“This is a game changer: Nasdaq listed company with $250M bitcoin (25% of assets, 15% of market cap) is basically a bitcoin ETF! Shareholders have 15% BTC exposure and 85% tech. No capital charges (like banks & pension funds), no SEC approval needed (like ETF). So it begins.”
