• Bitcoin recoups some losses as risk sentiment rebounds

• But cryptos fail to erase latest slump, lagging against stocks

• Absence of new catalysts shifts attention to presidential race

 

Bitcoin at a crucial level ahead of Jackson Hole

Bitcoin is down more than 9% this month, lagging almost against every major asset class. In early August, cryptocurrencies plummeted amid a broader selloff in risk sensitive assets, after the July downbeat NFP report triggered concerns over the health of the US economy. Although recession fears quickly evaporated, Bitcoin and major altcoins have failed to recover lost ground.

In the current environment, Bitcoin’s underperformance seems strange considering the increasing prospect of rate cuts by the Fed and the dollar’s weakness. Meanwhile, the recent volatility has once again debunked the notion that Bitcoin is immune to stress in the traditional financial system.

Right now, it seems that the only scenario that could boost cryptocurrencies in the near term is a dovish speech by Fed Chair Jerome Powell at the Jackson Hole Symposium. The king of cryptos is currently holding above the crucial $60,000 psychological mark ahead of the event, where a break below that hurdle could lead to a sustained decline.

What’s next?

Clearly, the crypto market is currently lacking both the catalysts and the excitement needed to extend its strong year-to-date performance. Traders have now shifted their focus to the Fed’s interest rate trajectory, but it is highly unlikely that the central bank will meet markets’ overly dovish expectations.

Surprisingly, the upcoming US presidential election in November has emerged as a critical turning point for digital currencies. This was seen when former US President Donald Trump made a U-turn regarding his critic stance against cryptos, which seemed to have a positive impact on his popularity as well as on digital currencies.

This could likely push the Democratic Party towards adopting a more crypto-friendly stance as crypto investors appear to represent a significant voting base in the US. In a nutshell, both parties are under pressure to endorse the acceptance and use of cryptocurrencies, which is anticipated to provide a further boost to prices.

BTCUSD capped by 50-day SMA

BTCUSD (Bitcoin) has been in the red in August, while the completion of a death cross between the 50- and 200-day simple moving averages (SMAs) has further deteriorated the short-term technical picture. Although the leading cryptocurrency has been staging a rebound in the past few sessions, the 50-day SMA has repeatedly repelled further upside attempts.

Should the 50-day SMA hold its ground and the price reverse lower, immediate support could be found at the April bottom of $56,483. A violation of that territory could pave the way for the July low of $53,250.

On the flipside, bullish actions could send the price to test the recent rejection region of $61,850, which overlaps with the 50-day SMA. If that barricade fails, there is no prominent resistance until the April hurdle of $67,270.