Thursday witnessed sharp fluctuations in the cryptocurrency market, as Bitcoin started its day achieving a new record level exceeding $124,500, but quickly fell back to around $118,400, a drop of nearly 5% within a few hours.
Although this drop seemed violent, its causes were expected and come in the natural context of a corrective wave following new peaks. The most important thing? The overall upward trend is still in place.
What triggered this sudden pullback?
The spark began with the release of new inflation data in the United States, where the "Producer Price Index" (PPI) came in with a very high reading of 0.9% compared to expectations of only 0.2%.
This data put markets in front of the possibility that inflation might rise again, which means a decline in enthusiasm towards cutting U.S. interest rates.
But despite all this, markets still expect a rate cut in September of over 90%, which may mean that the market's reaction was somewhat excessive and could be short-lived.
In a parallel context, U.S. Treasury Secretary "Bicent" sparked controversy after hinting at the government's intention not to buy more Bitcoin for its strategic reserve, before quickly backtracking and confirming that it is still possible.
As investors began taking profits at the highest levels, Bitcoin ETF funds saw outflows of about $293 million, increasing selling pressure.
From a technical analysis perspective: Everything is still under control
Looking at the daily chart, Bitcoin is still moving within an upward channel that started last April. The upward trend line currently passes at the level of $116,000, which is close to the fifty-day moving average at $115,200 – the same level that halted the previous drop in July.
This simply means that Bitcoin will maintain its positive trend as long as it stays above this range. Therefore, the current pullback is not a crash but an opportunity, at least from the perspective of many traders.
If positive momentum returns, the first barrier will be at $120,000, then the last peak of $124,500, followed by potential resistance levels at $125,000 and $130,000.
Bitcoin has matured… and this changes the game rules
Notably, Bitcoin has become a more mature currency, making its movements more stable than alternative currencies. While some assets dropped by more than 10%, Bitcoin's loss remained around 5%, indicating that it has become a relatively safer haven in the volatile crypto world.
However, this maturity has another aspect; it no longer rises with the violent intensity we were accustomed to in previous market cycles, which makes some investors look towards other, riskier, and more profitable opportunities.