Bitcoin Struggles with Key Resistance Despite Positive Inflation Data: Will Bullish Momentum Return?

Despite a favorable U.S. inflation report, Bitcoin (BTC) was unable to overcome a significant resistance level on Thursday, continuing its downward trend that began in early June.

The positive inflation news initially boosted market optimism and increased bets on a potential Federal Reserve rate cut, driving interest in higher-risk assets like BTC. For a brief period, it seemed Bitcoin bulls might secure a position above the descending trendline near the June highs of $72,000. Such a move could have indicated the end of the recent pullback and attracted momentum traders.

However, the bullish momentum was short-lived as BTC prices declined from the trendline resistance, falling below $57,000 early today. This latest setback, despite positive macroeconomic indicators, suggests potential further price declines. A similar trendline rejection on July 1 had previously intensified the sell-off.

Nonetheless, there is some optimism for BTC bulls. The daily chart’s MACD histogram, an indicator of trend strength and changes, is hinting at a crossover above zero, which could signal a bullish shift in momentum.

The recent supply overhang from Germany’s Saxony state, which contributed to the price drop earlier this month, is nearly depleted. Additionally, it’s unclear how much of the 95,000 BTC, part of the 140,000 BTC scheduled for distribution to Mt. Gox’s creditors, will actually be sold.

According to crypto prime broker FalconX, the anticipation of some of the $16.3 billion FTX repayment in the coming months could create buying pressure. Combined with an increasingly favorable stance toward crypto across political lines and the potential benefits of a September interest rate cut, this should encourage medium- and long-term BTC bulls.

FalconX also noted that potential selling by Mt. Gox’s creditors might differ from Saxony’s sales, potentially involving more transactions through exchanges rather than professional liquidity providers and a more diversified holder base distributing sales over time.