Bitcoin Bulls Fail Again But There’s Still Hope

Bitcoin (BTC) continues the downward trend observed since the beginning of June, despite the positive US inflation report announced yesterday, unable to overcome a significant resistance.

Markets quickly raised their bets on a Fed rate cut after the U.S. reported its first decline in consumer prices in four years.

For a moment, it seemed that bitcoin bulls would gain ground above the descending trendline and sell-off would begin at June highs near $72,000. Such a development would signal the end of the pullback and attract momentum traders.

But bullish hopes took a hit as prices turned down from the trendline resistance, sending bitcoin falling below $57,000 earlier in the day.

The bull failure observed against the backdrop of positive macro news flow could mean further price weakness ahead. A similar trendline rejection on July 1 caused major damage to the market by driving expensive selling.

Still, the daily chart MACD histogram, an indicator used to measure trend strength and changes, is moving above zero, a sign of an impending uptrend in momentum.

The glut from the German state of Saxony that catalyzed the price crash earlier this month appears to be almost over, and it remains unclear what percentage of the 95,000 BTC of the total 140,000 BTC scheduled to be distributed to Mt. Gox’s creditors will be liquidated.