Bitcoin News Today: Bitcoin Recovers 1% to $118k on Institutional Demand and Rate Cut Speculation

Bitcoin's price has experienced significant volatility, dropping below $116k after reaching an all-time high on Monday. However, the market is currently in a recovery phase, with Bitcoin adding 1% to its value in the last 24 hours, now trading above $118k. This recovery is driven by growing institutional demand for Bitcoin products and speculation around a potential rate cut by the Federal Reserve in September.

Data from SoSoValue indicates that U.S. spot Bitcoin exchange-traded funds reported their ninth consecutive day of total net inflows on Tuesday, with $403 million moving into the funds. BlackRock’s IBIT led the gains with net inflows of $416.35 million, followed by VanEck’s HODL with $19 million in positive flows. Grayscale’s Mini Bitcoin Trust and Bitwise’s BITB also recorded net inflows for the day. This influx of capital from institutional investors has been a key driver in keeping Bitcoin's price elevated, as these investors often have a long-term perspective and are less likely to be swayed by short-term market fluctuations.

Yesterday’s CPI figures also contributed to bullish sentiment across the broader cryptocurrency market. Core CPI rose just 0.1% month-over-month for the fifth straight time, signaling further disinflation. Traders are now predicting a September Fed rate cut following yesterday’s CPI data. Despite Bitcoin’s ongoing rally, analysts remain uncertain about a breakout in the medium to long term. Andrejs Balans, risk manager at YouHodler, noted that inflation in major economies remains persistently above target, prompting central banks to hold policy rates higher for longer. This tight monetary environment has limited liquidity across risk assets, including cryptocurrencies.

Balans further explained that Bitcoin’s market has matured considerably, with improved liquidity and participation by professional trading firms. This evolution has reduced volatility compared to past cycles, a sign of a more resilient market, but also a factor that can dampen large speculative moves. Following significant gains this year, many long-term holders have realized profits, thereby adding to the market’s supply. Without sustained fresh demand, this selling pressure could keep prices range-bound rather than driving a decisive breakout.

The BTC/USD 4-hour chart is bullish and efficient thanks to the cryptocurrency’s rally over the last few days. The coin tapped the 4H Transactional Liquidity (TLQ) level at $116k on Tuesday, prompting a rally above $118k. Technical indicators suggest a sustained rally, which could push BTC towards the $120k resistance level in the near term. The MACD lines remain within the positive zone, while the RSI of 58 shows that the bulls are yet to relinquish control of the market. In the event of an extended rally, BTC could surge past its all-time high of $123k over the next few hours or days. On the downside, failure to build momentum above the Bollinger mid-band of $118,200 could see BTC retest the first major support level at $115k. The bears could retest the second major support at $112,500 if the bearish trend continues, with an important trendline liquidity within that region.

The dominance of Bitcoin in the cryptocurrency market remains strong, with its market share hovering above 63%. This dominance is further supported by institutional interest and yield strategies, which have become increasingly popular among large investors. As a result, altcoins, while gaining some momentum, have not been able to challenge Bitcoin's leading position. Analysts have been closely monitoring Bitcoin's price movements, with some predicting that if the cryptocurrency can sustain its price above $120,000 into early August, the next target could be in the range of $128,000 to $130,000. Technical indicators such as volume and the Moving Average Convergence Divergence (MACD) continue to support an upward trend, although there are concerns about the market being overbought.

The rally in Bitcoin's price has also sparked discussions within the crypto community about potential price targets. Some observers have identified targets ranging from $140,000 to $200,000, driven by the strong institutional demand and the potential for further rate cuts. However, there are also cautionary voices urging investors to be mindful of the risks associated with such a rapid price increase. The sustained interest from institutional investors signals a strong demand for Bitcoin, which could continue to drive its price higher. If large investors remain committed to the cryptocurrency, the rally may not be over yet. This institutional support, combined with the potential for a rate cut, creates a favorable environment for Bitcoin's price to continue its upward trajectory.