The current trading week has provided much food for thought about the current state of Bitcoin. On one hand, the asset has proven to be a resilient instrument that shows little reaction to macroeconomic data and moves on its own path. At the same time, Bitcoin has failed to establish a sustainable upward trend after breaking the $30k mark.
Throughout this week, we have observed Bitcoin's flat movement with attempts to consolidate above $31k. To some extent, the asset has achieved its interim target, reaching a level of $31.5k and setting a yearly high. However, the cryptocurrency's price subsequently dropped to $30k, and Bitcoin ends the workweek on the edge of a cliff, a fall from which could send BTC down to $25k.
Fundamental Factors
Bitcoin has shown a weak reaction to the Federal Reserve's minutes and labor market reports. Despite this limited response, these macroeconomic data will be of significant importance next week when CPI data is released. Currently, we are witnessing a rapid decline in liquidity in financial markets, which may worsen if inflation remains persistent.
Meanwhile, the number of initial jobless claims stands at 248,000, compared to the previous reading of around 260,000. This decrease could serve as an additional argument for the Federal Reserve to raise the key interest rate at the July meeting. Considering these facts, the macro data of the current and upcoming weeks will be crucial in shaping the medium-term trend of BTC.
There is a high probability that trading activity will decline, as regardless of the pace of inflation reduction, the likelihood of a rate hike on July 26 is over 80%. A deflationary movement of 0.5% can only provide a local boost to trading activity but will not alter the decision-making mechanics.
Change in BTC's Short-term Trend?
After successfully solidifying the price of BTC above the $30k level, bulls attempted to form an upward trend. For several weeks, we have observed rising lows and highs. Bitcoin's price tested the $31k–$31.5k area six times over the past two weeks, but significant progress was not achieved.
Subsequently, Bitcoin managed to reach a local high at $31.5k, after which bearish volumes flooded the market. As a result, Bitcoin experienced a strong downward impulse and reached the $29.8k–$30k support level. As of July 7, the asset is struggling to hold this level with daily trading volumes around $21 billion.
The bullish idea for Bitcoin did not materialize, and the asset returned to its familiar range of fluctuations between $29.8k and $30.5k, where further price movement will continue. Sellers have taken the initiative, and in the near future, we can expect a retest of the $29.8k level. The situation may change, but a strong price movement is not expected, as market sentiment has significantly deteriorated after this week's macroeconomic data.
As for the short-term prospects of the asset, there is a high probability that Bitcoin will spend the weekend in consolidation. Market volatility will drop to a minimum until July 12, when U.S. consumer inflation statistics are published. Subsequently, this will allow investors to form a medium-term strategy.
Conclusion
In the medium-term perspective, the bullish trend of Bitcoin is not in doubt, despite the discouraging macroeconomic data. Major investor categories continue to actively accumulate BTC coins, and market sentiment remains high. The Fear and Greed Index indicates local euphoria in the cryptocurrency market, so there is every reason to believe that Bitcoin will at least hold the $29.8k area.
At this stage, for the realization of the bullish idea with a movement towards $34k–$35k, Bitcoin needs to maintain the $29.5k level as the foundation of the current range of fluctuations. As of July 7, there are no clear bearish signals in the BTC market, which provides grounds to expect a resumption of local upward price surges over the weekend.
