Bitcoin investors received what should have been a fairly supportive and positive combination of macroeconomic data in the past week, starting with the weak US jobs report last Friday.
However, the asset failed to produce any significant gains, again. Moreover, it has lost some traction and is actually down on a weekly scale, currently struggling to remain above $63,000. Why is that?
Why No Gains, BTC?
After the jobs report from a week ago, which managed to push BTC beyond $65,000 briefly, all eyes turned to the US CPI data on Wednesday. As reported, the July numbers came broadly in line with expectations, initially leading to a brief rebound to $64,400 before Bitcoin gave the gains back and resumed the downtrend it was already on as the business week progressed.
The subsequent PPI report was even more encouraging, with producer prices remaining flat month-over-month, contrary to expectations of a 0.2% increase. CryptoQuant weighed in on the matter and added that Treasury yields declined, while US equities posted some gains. Under normal circumstances, this combination should have provided some relief for risk-on assets, but BTC has failed to make a move upward.
Their analysis indicated that the explanation may have less to do with the macro environment and considerably more to do with a simple problem: Bitcoin buyers are nowhere to be seen in the spot market.
The report explained that such trading activity remains subdued, while flows into the US BTC ETFs have remained relatively weak in the past several days. Even more importantly, the Coinbase Premium Index continues to be almost entirely in negative territory for three months, and it now sits at around -0.1%.
The analysts added that the seven-day average spot trading volume across major exchanges dropped from nearly $9 billion in late June to under $4 billion on August 12. This 55% decline came even as BTC’s price recovered 8% within the same timeframe.
The Real Price Test
CQ identified Bitcoin’s short-term holder cost basis at around $68,700 as a major obstacle to the asset’s path forward, as it’s a level at which investors who bought relatively recently could exit at breakeven if the cryptocurrency reaches it.
As such, a surge to $65,000 won’t be enough to confirm that the broader trend has changed. They believe a more sustainable recovery would require several developments at once: renewed, significant ETF inflows, such as those from the previous week; stronger spot volume; a return to a positive Coinbase Premium; and a decisive break above $68,700.
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