Bitcoin rose as high as $124,533 on Aug. 14 before taking a hit following July’s hotter-than-expected wholesale inflation data.
The July consumer price index was broadly in line with market expectations, though the core reading that excludes food and energy edged higher to 3.1%, slightly over Wall Street estimates. However, the July producer price index, which measures wholesale items, showed a surprise strong 0.9% monthly gain, the most in nearly three years.
Around the time of writing, BTC was trading down 0.77% in the last 24 hours to $117,741, following Friday’s drop to a low of $116,859.
On what comes next, BTC’s average entry price for newer investors and its standard deviation bands can help to identify overheated zones.
According to Glassnode data, the short-term holder realized price (STH RP) for Bitcoin (BTC) currently sits at $107,000, which represents the average on-chain acquisition price of Bitcoin (BTC).
The STH RP +1σ level is at $127,000, and it is a major key resistance for Bitcoin to surmount, with a breakout opening the path to $144,000, which coincides with the short-term holder realized price +2σ, a level where prior market tops saw increased selling pressure. Short-term holder realized price standard deviation bands +1σ and +2σ coincide with heated and overheated zones, respectively.
Bitcoin has not yet reached these levels, suggesting that the current rally might still have room to run.
Fed signals closely watched
Federal Reserve President Austan Goolsbee spoke on Friday about mixed inflation numbers, with the ongoing instability showing doubts for reduced rates.
The Fed’s annual meeting of the world’s central bankers in Jackson Hole, Wyoming, from Aug. 21-23, has historically been used for the Fed to signal policy shifts and will be watched closely by investors next week.
Markets expect the FOMC to vote to decrease the benchmark federal funds rate by a quarter percentage point in September, from 4.25% to 4.50%. However, there are concerns about what happens next, with 55% odds of another cut in October and only a 43% chance of a third move in December.