Bitcoin potential recovery! Let's wait a bit?

Bitcoin futures are hovering around a critical level as we begin the new week. Last week, BTC experienced a sharp decline, breaking below the 57,215 level before buyers intervened to drive the price back up from the lows. Continued buying in early European trading on Monday is now pushing the price to break back above this key level. The decline last week was driven by increased supply pressure from significant Bitcoin sales by the US and German governments (seized asset sales) and the liquidation of the Mt. Gox bankruptcy estate, with a combined potential supply value of around $22 billion. Without the concurrent plunge in the USD, BTC could have fallen even lower.

Despite the bearish supply and demand backdrop for BTC, there are notable bullish factors at play. Expectations for imminent easing by the Fed have increased significantly over the past week, as traders analyze recent economic data. Friday’s jobs report supported dovish expectations, with the unemployment rate rising and wages falling. Looking ahead, if Thursday’s US CPI data shows a third consecutive month of weakening, it will likely cement expectations for a September rate cut, putting further pressure on the USD.

While BTC price action might remain volatile in the near term due to ongoing asset sales, the anticipated Fed easing throughout the year could lead to a strong recovery for BTC in Q3 and Q4. If US inflation continues to decline and the Fed proceeds with multiple rate cuts, BTC could end the year significantly higher.

In the near term, the 57,215 level remains a crucial pivot for BTC. If bulls can push the price back above this level and consolidate, attention will shift towards a renewed push higher, targeting the bear channel highs at 69,355 and 72,550 as structural resistance levels. Conversely, if the current support at 53,525 fails, the focus will shift to testing the bear channel lows and the 47,465 level below.