The economic data released in the U.S. last week exceeded expectations, quickly cooling market expectations for Fed rate cuts. Investor confidence was significantly impacted, and the cautious atmosphere still lingers. Today (the 18th), the cryptocurrency market faced selling pressure again, with both Bitcoin and Ethereum declining, while altcoins fell into a sea of red.
According to CoinGecko market data, Bitcoin dipped to a low of $115,222 today, with the writing price at $115,236, reflecting a daily decline of 2.4%, which is a 7% pullback from last week's all-time high of $124,128. Ethereum also faced pressure, dropping 4.3% in the past 24 hours, currently at $4,287. Among the top 20 cryptocurrencies by market capitalization, only Chainlink (LINK) rose against the trend, but with an increase of less than 1%, currently at $24.59.
Vincent Liu, Chief Investment Officer of Kronos Research, stated: "The decline in Bitcoin reflects that investor sentiment is more cautious in light of higher-than-expected inflation data in the U.S. Rising inflation means a lower chance of Fed rate cuts, which strengthens the dollar and naturally leads the market to seek refuge."
Looking back at last week's market, Bitcoin initially surged due to the Consumer Price Index (CPI) being lower than expected, reaching an all-time high, but the subsequently released July Producer Price Index (PPI), which showed a year-on-year increase of 3.3%, exceeded market estimates, dampening investor expectations for a rate cut in September and interrupting the upward trend.
Vincent Liu pointed out: "At this moment, traders are opting to stay put, preferring to wait for clearer signals regarding the overall economy and market direction before re-entering."
The cryptocurrency market sentiment indicator 'Fear & Greed Index' currently shows 56 (out of 100), indicating that the overall investment atmosphere is in the 'neutral' range.
ETF capital flow shows 'rotation' rather than withdrawal
However, BTC Markets analyst Rachael Lucas has a more optimistic interpretation of the market. She believes that the capital flow in Bitcoin spot ETFs shows that this decline is not a complete market withdrawal, but more like a "rotation of funds."
Last Friday, Grayscale and ARK Invest's Bitcoin spot ETFs faced redemptions, but BlackRock's IBIT ETF continued to attract capital inflows. Ethereum spot ETF capital flow showed a similar trend.
Rachael Lucas analyzed: "Although the total daily capital flow has slightly decreased, institutional participation remains strong, indicating that investors are shifting to lower-cost products rather than completely exiting the market."
Rachael Lucas noted that Bitcoin's key support currently lies in the range of $115,000 to $112,500. If these levels are breached, it may trigger a new wave of declines, testing the $110,000 mark.
This Week's Focus Events
Most analysts believe that the next important catalyst driving the market will still be overall economic events in the U.S.
Rachael Lucas stated: "Market focus will shift to the Jackson Hole central bank annual meeting on August 22. If Fed Chairman Jerome Powell's remarks lean dovish, it may reignite the market's appetite for risk. Continuous net inflows into ETFs and corporate allocations will also be crucial support for Bitcoin."
Vincent Liu reminded that the U.S. initial jobless claims data, set to be released on August 21, will also be a key factor affecting Bitcoin's next movement.
