Bitcoin's recent dip to around $113,000 might be viewed as a fleeting opportunity before the digital asset potentially reaches new heights. After a surge to $124,000, Bitcoin experienced a pullback, settling at $112,932. This decrease occurred as investors awaited a speech from Fed Chair Powell.
Several factors contributed to this price movement. Profit-taking appears to be a significant driver, with on-chain data indicating that this is Bitcoin's third major profit-taking cycle of 2025. The MVRV ratio, which was at 21%, suggested that most Bitcoin holders remained profitable, which historically prompts selling waves.
Market sentiment also played a role. Cleveland Fed President Beth Hammack reinforced a hawkish stance, stating that inflation is still too high and opposing a rate cut, which caused crypto prices to slide. The Fear & Greed Index also fell to 56, the lowest since August's retest of $112,000, reflecting fading optimism that the Fed will deliver a bold September cut.
Furthermore, liquidations have cleared out excessive leverage in the market. CoinGlass data revealed over $1 billion in trader liquidations, with 95% hitting long positions. A significant amount of Bitcoin longs vanished within an hour, driving Bitcoin below $114,000.
Despite this recent volatility and macro cautiousness, institutional interest in Bitcoin remains. Family offices in Hong Kong and Singapore are increasingly adopting Bitcoin as a portfolio diversifier.
Looking ahead, several factors could influence Bitcoin's price. The market is anticipating the upcoming CPI data for August. JPMorgan projects August CPI at 2.9% YoY, with core CPI steady at 3.1% YoY. The bank suggests that if the Core CPI is greater than 0.4%, the markets will record more losses. However, if the Core CPI comes in lower than 0.25%, the markets will rebound in anticipation of rate cuts.
Technical analysis suggests that Bitcoin was rejected at a crucial resistance level around $113k and is likely to retest the support range between $107.5k and $108k again. Crypto analyst Michaël van de Poppe has predicted that the BTC price is likely to retest the support area around $103k before rebounding to a new all-time high in the coming months.
Jerome Powell's remarks at the Jackson Hole symposium also fueled expectations of a possible interest rate cut in September, initially pushing investors toward high-risk assets like cryptocurrencies. However, Bitcoin later retraced due to profit taking and the emergence of technical resistance levels, signaling a temporary consolidation phase for the market.
Overall, while the recent price drop may cause concern, it could represent a final opportunity to buy Bitcoin at a discounted price before a potential surge to new all-time highs. The market's reaction to upcoming economic data, particularly the CPI figures, and any shifts in Federal Reserve policy will likely be key drivers in determining Bitcoin's trajectory.
