Bitcoin Price Prediction: Why Is Bitcoin Dropping Despite Positive Economic News?

Recent US economic data, including a cooling of consumer inflation to 3.4% in July and producer prices coming in unchanged against expectations, should logically have supported the price of Bitcoin. Historically, controlled inflation and potentially lower interest rates are favorable catalysts for digital assets like Bitcoin (CRYPTO:BTC). However, the market's reaction has been the opposite of what was expected, with Bitcoin falling after these figures were released, while traditional stock indices like the Nasdaq and S&P 500 advanced.

This divergence raises important questions for investors and observers of the cryptocurrency market. Bitcoin, currently valued at approximately 1,18 € trillion, has lost half its value from its record high last October and is well below its price of the previous year. The downward trend observed since the beginning of the year, marked by a 34% drop in the first half, seems to persist despite encouraging macroeconomic indicators.

Several factors explain this complex situation. Firstly, a significant portion of Bitcoin holders, around 45% to 46% (nearly 9 million coins), are currently at a loss. Those who bought in the last six months did so at an average price of 63 204,00 €, placing them down 7.2%. These investors tend to sell as soon as the price rises back towards their purchase point, creating constant selling pressure and keeping Bitcoin within a narrow price range between 53 360,00 € and 62 560,00 € since June.

Secondly, the general market sentiment is marked by fear, as indicated by the "Fear and Greed" index reading of 29. The BTC price has fallen below all its key moving averages, including the 200-day moving average. Perpetual futures trading has hit a three-year low, signaling a decrease in speculative activity and increased caution among traders.

Producer price data, which reflects what factories and suppliers charge, is particularly noteworthy. A lack of increase suggests that consumer prices should follow, which is generally good news for Bitcoin. Yet, the market showed only a minimal, or even negative, reaction, highlighting a shortage of buyers ready to seize this opportunity.

The Federal Reserve's monetary policy remains a key element. Although the odds of a September rate hike have decreased, markets still anticipate a tightening of monetary policy by the end of the year. This uncertainty regarding the Fed's future decisions weighs on investor confidence and curbs capital inflows into Bitcoin-related investment products.

Inflows into spot Bitcoin ETFs, despite a record week in August, remain volatile and are offset by significant over-the-counter (OTC) sales from miners and certain investment strategies. Miners are selling to fund artificial intelligence projects, while other players are selling even below their acquisition cost, adding selling pressure not visible on traditional order books.

Despite these pressures, large Bitcoin holders ("whales") continue to accumulate. Wallets holding over 1,000 BTC have reached a yearly high, indicating that major market players are betting on a long-term recovery. This accumulation by "whales" contrasts with the sales from miners and corporate treasuries.

Short-term outlooks suggest that Bitcoin could remain in the 55 200,00 € to 60 720,00 € range heading into September. A break below this zone could lead to a further decline, potentially towards 50 600,00 €, according to some analysts. The absence of significant positive regulatory catalysts before the end of the year and a potentially hawkish Fed statement after the September meeting could keep buyers away throughout the fourth quarter.

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