There has been a modest recovery in the cryptocurrency market, as all major digital currencies are currently trading in positive territory, albeit below their weekly peaks.
Bitcoin (BTC) has managed to climb back above $54,000, recording a 0.6% increase in the past 24 hours, while Ethereum (ETH) has also shown a 1.3% rise, reaching $2,290 at the time of this update.
Among the top ten cryptocurrencies by market capitalization, Dogecoin (DOGE) has emerged as the top performer with a solid 2.6% gain.
This recent upturn follows the statement made by US Treasury Secretary Janet Yellen, who expressed confidence in the resilience of the American economy, describing it as strong and well into recovery.
Speaking at the Texas Tribune Festival over the weekend, Yellen addressed concerns raised by the disappointing job report released last week, clarifying that the data indicated a soft landing rather than an imminent recession.
Yellen’s remarks have resonated within the cryptocurrency community, sparking various reactions. Arthur Hayes, the co-founder of BitMEX, suggested that Yellen might resort to increasing money supply to drive economic growth.
Hayes noted, “If the market continues to decline, Yellen is likely to inject more liquidity into the system.” such actions could push investors towards high-risk assets like cryptocurrencies, as the risk of inflation rises with increased money supply.
Bitcoin Faces Continued Uncertainty
Despite the recent recovery, Bitcoin’s price continues to face challenges. The Bitcoin Spent Output Profit Ratio (SOPR) has struggled to surpass 1 since the beginning of the month.
This metric suggests that on average, investors have been selling Bitcoin at a loss over the past week. Such behavior indicates a bearish sentiment and market turbulence as traders react to uncertainties and attempt to minimize their losses.
Additionally, buying pressure remains weak, as indicated by the negative Chaikin Money Flow (CMF) indicator presently. The CMF continues to decline and is currently at its lowest level since June on the four-hour chart.
The prevailing bearish sentiment is further evidenced by the On Balance Volume (OBV), which remains predominantly negative, highlighting selling pressure that is exerting downward force on Bitcoin prices.
However, Bitcoin may have found a strong support level around $53,469, where it previously experienced an 8% price rebound. This could potentially serve as an attractive entry point for investors.
It is important to note that buyers may remain cautious as they await the release of the US Consumer Price Index (CPI) data on September 11th.
The market expects the August inflation figure to be around 2.6%. A CPI in line with or below expectations could fuel a recovery in the crypto market. Conversely, if the data reflects a weakening US economy, cryptocurrency prices may face further downward pressure.