• Expectations of lower Fed rates benefit bitcoin

• Crypto-friend Kennedy endorses Donald Trump

• But speculation of potential major sale weigh

 

Fed’s Powell sounds more dovish than expected

Bitcoin rallied around 5% on Friday after Fed Chair Powell appeared more dovish than expected at the Jackson Hole Economic Symposium, perhaps receiving extra support after Robert F. Kennedy Jr. announced his decision to withdrawn from the presidential race and endorse Donald Trump.

At the Jackson Hole Economic Symposium, Fed Chair Powell said that ‘the time has come for policy to adjust’ as their confidence has grown that inflation is on a sustainable path back to 2%. He also added that the pace of rate reductions will depend on incoming data and that they will not tolerate further cooling in employment.

Bitcoin more of a risky asset than digital gold

Although often touted as digital gold, bitcoin remains more closely linked to the stock market, which means that most market participants consider cryptocurrencies to be risky assets. Yes, both stocks and gold are rising on the prospect of lower interest rates, but what likely creates a distinction is cryptos’ different response to geopolitics.

Over the weekend, tensions in the Middle East escalated, with Israel and Hezbollah exchanging strikes. This resulted in a rising gold on Monday, as the metal seems to be the safe haven of choice during geopolitical unease, but cryptos began the new week on a soft footing.

On Wednesday, Bitcoin extended its sharp downturn after a large volume of tokens were moved to a popular exchange, which raised fears of a major sale soon, although there is no concrete information that such a scenario would occur.

US political developments in favor of cryptos

What may have also provided a boost to the crypto market on Friday and during the weekend was Kennedy’s support to Donald Trump for this presidential race.  Both Kenedy and Trump share pro-crypto views, and that was cheered by the market.

Although it is still unclear whether Kennedy’s endorsement would help Trump secure victory, Democrats may pay attention and adopt a friendlier attitude towards the crypto space, in order to not risk losing supporters, something that may be nothing but positive for Bitcoin and other tokens, no matter who wins in November.

ETF demand accelerates, but then tumbles

Demand for bitcoin-backed ETFs is another variable in this equation, and despite bitcoin trading well below its March record high of $73,803, according to data from coinglass.com, the total spot EFT net inflow accelerated on Friday to the highest since July 22, with Monday’s figure remaining elevated as well. Tuesday, however, was a net outflow day, which also explains this week’s pullback.

Bitcoin tumbles below key territory of $61,600

From a technical standpoint, bitcoin broke above the key barrier of $61,600 on Friday, but after hitting resistance at around $64,700 during the weekend, it pulled back this week. Today, bitcoin slipped back below $61,600, a key territory near which the cryptocurrency changed hands on several occasions this year.

In the bigger picture, the crypto king is trading within a broadening formation, and thus, even if the price rebounds and breaks above $64,700, for the outlook to brighten, a decisive break above the formation’s upper bound and the $70,200 zone may be needed. Such a move may pave the way for another test near the record high of $73,803.

On the downside, the dip below $61,600 may keep the bears on alert, prompting them to push the action towards the low of August 15 at $56,200, the break of which could allow extensions towards the $50,500 zone.