In the current moment, the cryptocurrency market has shown a slight upturn, with all the top-ten digital currencies recording gains, even though they have not yet reached their peak for the week.
Bitcoin [BTC] has successfully surpassed the $54,000 mark following a 0.6% increase in value over the past 24 hours. Ethereum [ETH] has similarly shown growth, rising by 1.3% to reach a trading price of $2,290 at the time of writing.
Among the top ten cryptocurrencies with the largest market capitalization, Dogecoin [DOGE] has experienced the most substantial gain, recording a 2.6% increase.
This recent positive trend in the market has been influenced by comments from US Treasury Secretary, Janet Yellen, who expressed confidence in the strength of the US economy, stating that it is in a robust phase of recovery.
Yellen made these remarks during her appearance at the Texas Tribune Festival over the weekend, addressing concerns raised following a disappointing jobs report released recently, where nonfarm payrolls fell short of expectations.
In response to worries about the weak job numbers, Yellen reassured that there were no alarming signs and interpreted the data as an indication of a gradual slowdown rather than an impending recession.
These comments from Yellen have elicited reactions from the cryptocurrency community, with Arthur Hayes, the co-founder of BitMEX, suggesting that Yellen might resort to increased money supply to boost the economy.
Hayes remarked, “Yellen will likely pump more money into the system if the markets continue to decline.”
Should such a scenario occur, investors could potentially turn to riskier assets like cryptocurrencies, as the risk of inflation rises with the increased money supply.
Bitcoin Faces Continued Challenges Ahead
Despite the recent upswing, Bitcoin’s price trajectory indicates ongoing struggles. The Bitcoin Spent Output Profit Ratio (SOPR) has failed to rise above 1 since the beginning of the month.
The SOPR metric reflects that the average BTC investor has been selling their holdings at a loss in the past week, signifying a bearish sentiment prevailing in the market. This trend of selling at losses highlights investor anxiety and underscores a negative market outlook.
Additionally, buying pressure remains subdued, as indicated by the negative value of the Chaikin Money Flow (CMF) indicator at present. This indicator continues to show downward momentum, reaching its lowest level since June on the four-hour chart.
The prevailing bearish sentiment is also evident in the On Balance Volume (OBV), which predominantly shows a negative trend. The persisting selling volumes have exerted downward pressure on Bitcoin prices, indicative of market weakness.
However, Bitcoin might have found a favorable entry point after testing the support level at $53,469, which previously led to an 8% price upsurge.
It is essential to note that hesitant buyers may be awaiting the release of the US Consumer Price Index (CPI) data on September 11th.
Projections for August inflation stand at 2.6%. If the CPI figures meet or fall below expectations, it could trigger a crypto market recovery. Conversely, if the data reflects a further weakening of the US economy, cryptocurrency prices may experience further declines.