Is Bitcoin Price in Big Danger? 3 Bearish and 2 Bullish Signs BTC Should Watch Out For

In the week ending August 17, Bitcoin price volatility persisted, even as low consumer inflation signaled an impending dollar oversupply and the S&P 500 index rose.

The latest US consumer inflation figures gave the Fed further arguments to justify a significant rate cut in September. This is good news for Bitcoin, because more dollars for the same BTC supply is a recipe for price gains.

Stock prices are now back in positive territory and are rapidly approaching their July record highs. This could indicate that investors are back on their feet after the flash crash in early August. However, this is not the case for Bitcoin and other cryptocurrencies, which remain in correction territory this week.

Solana, XRP and Polkadot prices have fallen by double digits this week. Other major cryptocurrencies such as Ethereum, BNB, Dogecoin and Cardano lost 2 to 8 percent over the course of the week.

So is the frost of another crypto winter already setting in, or are crypto exchange markets simply consolidating ahead of another major bull run to new all-time highs?

Here are some Bitcoin price signals that can help crypto traders answer this question.

3 Bearish Bitcoin Price Signals

Bitcoin price fails to break $70,000

The Bitcoin blockchain’s hash rate and network activity continue to show strength, but the orange cryptocurrency has not seen the same gains on exchanges as it has at this point after the halving in previous cycles.

Bitcoin price has struggled to break through key resistance at $70,000 all year, although it briefly broke the mark in March to hit a new record above $73,000.

Most recently, the exchange rate dropped below $60,000 as crypto markets lost $80 billion a day.

Exchanges: $1 billion in USDT withdrawals

Another pessimistic signal for the Bitcoin price and the prices of other cryptocurrencies is that retail investors have now withdrawn large amounts of stablecoins from crypto exchanges.

Yesterday, over 1 billion USDT was withdrawn from exchanges, marking the largest Tether outflow since May.

While deposits are often viewed as bullish – suggesting that users are preparing to purchase assets – withdrawals can have a more nuanced interpretation.

For example, users could… pic.twitter.com/7LQSeNi9kE

— IntoTheBlock (@intotheblock) 14 August 2024

Blockchain analytics firm Into The Block reported on Wednesday that users withdrew over 1 billion USDT from exchanges, the largest outflow of Tether stablecoin from crypto exchanges since May.

The last two times this happened, it preceded price corrections in Bitcoin. However, according to Into The Block, this may not necessarily be a bearish signal. Investors “may be shifting funds to participate in DeFi and looking for returns outside of centralized exchanges,” the blockchain firm noted.

Bitcoin price rejects low CPI pressure

This week’s Consumer Price Index, showing the lowest 12-month growth in consumer inflation since 2021, may have given Bitcoin price a tailwind. However, unlike other factors, there simply wasn’t enough support to keep BTC from crashing. This looks very bearish for the crypto markets.

Due to supply/demand economics and the nature of central bank policy, the low CPI should have attracted Bitcoin bulls. This community watches and understands central bank policy just as much as Wall Street and the bond markets. With inflation cooling rapidly and unemployment rising to 4.3% in July, the Federal Reserve is likely to cut interest rates in September.

Now economists and investors expect the US Federal Reserve to cut interest rates for the first time since it began raising rates in March 2022. Chris Larkin of Morgan Stanley E*Trade said:

“The key question now is whether the Fed will cut rates by 25 or 50 basis points next month. If most of the data over the next five weeks point to an economic slowdown, the Fed could cut rates even more aggressively.”

Such news might have given Bitcoin a jolt on the crypto exchanges if it had not seen such a bearish correction. But for now, the bears are in control of the price.

2 Bullish Bitcoin Price Signals

It’s not all bad news this week. The Bitcoin price could have value today based on these two signs:

Bitcoin on exchanges reaches new low

Investors are withdrawing their Bitcoins from the exchanges.

This is an optimistic attitudeand in previous markets, it has signaled high conviction and intent to hold Bitcoin no matter what. According to CoinGlass data, the amount of Bitcoin on exchanges recently fell to an all-time low.

In the seven days leading up to Thursday, August 15, BTC holdings on crypto exchanges decreased by -1,406 on Bitstamp, -1,008 BTC on Coinbase Pro, and -501 BTC on Binance. Total Bitcoin outflows on exchanges were -2,847 for all crypto exchanges tracked by CoinGlass.

Bitcoin technology

Bitcoin’s technical signals are also optimistic for the cryptocurrency in the second half of 2024. The Composite Global Liquidity Momentum Model (MSI) looks like it did last November, which was preceded by a historic rise in the Bitcoin price to record levels until March.

The model comes from Jamie Coutts, chief crypto analyst at RealVision Finance.

“My composite global liquidity momentum (MSI) model has delivered the first bullish regime signal since November 2023,” Coutts wrote in a post on X on Thursday. “Remember, Bitcoin was up 75% from November to April before the regime turned bearish.”

The central banks capitulate, the liquidity taps open, and #Bitcoin will rise much higher.

My composite global liquidity momentum (MSI) model has delivered the first bullish regime signal since November 2023. Recall that Bitcoin rose 75% from November to… pic.twitter.com/ovF6qSHX8c

— Jamie Coutts CMT (@Jamie1Coutts) 15 August 2024

And only time and the markets will tell, but the trendlines around the multi-month sideways channel for Bitcoin are snaking towards an (often bullish) falling wedge pattern. Is this a mirage or the start of something big for Bitcoin price?