Investing.com-- Bitcoin’s price traded flat on Tuesday as a recent rebound ran out of steam even as capital inflows persisted, with focus turning squarely to a slew of cues on U.S. interest rates due this week.
The world’s biggest cryptocurrency had risen after the Federal Reserve cut interest rates last week and announced the start of an easing cycle, with lower rates presenting better prospects for crypto.
But this momentum slowed as markets sought more cues on how much the Fed will cut rates further. Broader sentiment towards crypto also remained weak amid waning retail demand and an uncertain regulatory outlook.
Bitcoin remained steady at $63,625.0 by 08:30 ET (12:30 GMT).
Bitfinex highlights the level Bitcoin must surpass to break the downtrend
While Bitcoin has witnessed a significant resurgence after dipping below $54,000 earlier this month, analysts from cryptocurrency exchange Bitfinex remain cautious, saying a full bullish reversal has yet to be confirmed.
In a note seen by CoinDesk on Tuesday, the analysts highlighted that Bitcoin needs to surpass the August high of $65,200 to signal the end of its prolonged downtrend, which has been marked by lower price highs since March.
"BTC is now within touching distance of the Aug. 25 top of $65,200. The reason this level is important is because since the all-time high of $73,666 was reached on March 14th, BTC has still not managed to eclipse a single high before a local/new bottom was formed. This qualifies for the technical definition of a downtrend," the note explained.
"This implies that the August 25th local high at $65,200 before our September 6th local bottom holds a lot of significance from a higher time frame perspective," it added.
A solid move above this level would indicate the end of the interim downtrend and mark a continuation of the broader uptrend from October 2023, when Bitcoin was trading below $30,000.
Despite the recent price rise, the flattening of the cumulative volume delta indicator since Bitcoin crossed $63,500, suggests a slowdown in spot market buying, offering a reason for caution, Bitfinex points out. The cumulative volume delta tracks the net buying and selling volumes on centralized crypto exchanges over time.
Crypto logs second week of capital inflows
Data from digital assets manager CoinShares showed on Monday that crypto investment products logged a second straight week of capital inflows, amid optimism over the Fed’s rate cut.
Inflows amounted to $321 million last week, slowing from the week prior. Bitcoin was the primary focus of the inflows, but short-Bitcoin positioning also increased.
Ether clocked a fifth straight week of outflows, while most other altcoins logged mild inflows.
But despite the two weeks of inflows, overall capital inflows and trading volumes were at a fraction of those seen earlier this year, as sentiment towards crypto remained weak.
The prospect of a tight U.S. presidential race also presented an uncertain outlook for crypto, given that only Republican presidential candidate Donald Trump has presented a pro-crypto stance. Democratic nominee Kamala Harris is widely expected to continue the Biden administration’s crackdown against crypto.
Crypto price today: altcoins muted with more Fed cues on tap
Broader crypto prices tracked Bitcoin's underwhelming performance, with the world no.2 crypto Ether slipping 0.2% to $2,642.99.
XRP, SOL, and MATIC moved in a flat-to-slightly high range, while ADA outperformed, rising 5%.
Among meme tokens, DOGE added 2.6%.
Traders remained mostly cautious before addresses from a slew of Fed officials this week- most notably Chair Jerome Powell.
PCE price index data- the Fed’s preferred inflation gauge- is also due on Friday.
Ambar Warrick contributed to this report.