5 Things to Know About Bitcoin as Volatility Collapses and CPI Meets BTC Price

This week, as Bitcoin (BTC) begins its second week of August with rangebound BTC price behavior, Cointelegraph takes a look at the main topics of interest to keep in mind when it comes to BTC price action.

The key readout to watch is the United States Consumer Price Index (CPI) — a potential volatility catalyst ahead of the next interest rate decision in September. However, Bitcoin has been famously stubborn this quarter, and it may take more than that to rediscover a trend.

On-chain data is pointing to an accumulation phase for whales and other larger investors. Additionally, network fundamentals are expected to increase, while the number of new wallets is defying price action and continuing to grow.

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Bitcoin price predictions trend lower after silent weekly close

Bitcoin ended the week without any significant movements, keeping its trading range confined and no last-minute surprises.

Data reveals BTC/USD stayed within a $200 corridor overnight — a situation that is still valid at the time of writing.

For market players, this could result in lower levels entering next, as buyers lack the impetus to overcome selling pressure below the essential resistance levels of $29,250, $29,500 and $30,000.

“BTC continues to reject at ~$29250. As long as that continues, bias favours to lower prices,” trader and analyst Rekt Capital explained.

Identifying a possible support zone just below the current price, fellow trader Credible Crypto argued that volatility could increase as the working week starts.

“In any case, want to see some strength here soon or else we might still have one more local low to go (which would be fine),” he commented on X (formerly Twitter).

Additionally, Michaël van de Poppe, founder and CEO of trading firm Eight, suggested that Monday could bring a local low for Bitcoin to act upon throughout the week.

“Monday coming up, usually a day that Bitcoin makes it’s standard drop. In that case, targeting $28K to bid,” he said.

Querying the return of BTC volatility

Overall, however, Bitcoin is experiencing low volume, resulting in the return of its lowest-ever levels of volatility. On weekly timeframes, popular trader Skew highlighted the lack of volume in the market. A volume profile chart showed the context of Bitcoin’s current trading range of $26,000 to $32,000.

“Realized volatility for Bitcoin has gone down to historical lows,” reported Checkmate, lead on-chain analyst at Glassnode, on Aug.7.

Uploading a chart of Bitcoin’s annualized realized volatility, Checkmate revealed that such flat behavior was last seen in the months after the March 2020 COVID-19 cross-market crash. He further commented that “across 1-month to 1yr timeframes, this is the quietest we have seen the ICP Crypto Today since after March 2020.”

“Reaccumulation” becomes Bitcoin buzzword

The term “reaccumulation” has been gaining a lot of attention in the current market conditions.

As Cointelegraph reported, whales are particularly in focus, as they are slowly maneuvering into what could be the next run to all-time highs for Bitcoin.

Reaccumulation has been a common trend in the aftermath of each BTC price cycle bear market, and analysts are expecting the same this time.

“Retail sold this last bear market, whales didn’t flinch,” noted popular technical analyst CryptoCon last week.

Unlike previous bear markets, whales are not selling their holdings but instead are reaccumulating them, which is further strengthening the bullish case for the future of Bitcoin.

It is not only whales that are contributing to the accumulation of Bitcoin; day traders are also giving market cyclist Cole Garner reason to be optimistic.

Asian buyers are dominating the day-to-day trading landscape, which is an important indicator that BTC price will go up, not down.

“When buyers dominate the Asian session, BTC & ETH prices goes up. As a general trend, almost always,” he highlighted in anX thread at the weekend.

Garner referred to the Asian buying dynamic as “potent alpha nobody talks about.”

Adding to the accumulation argument, the number of Bitcoin wallets has been growing despite the BTC price dropping below $30,000 after local highs.

“This bullish divergence between price and network growth hints at a stable long-term BTC uptrend,” said popular analyst Ali while sharing Glassnode data.

Fundamentals show signs of recovery

The Bitcoin network is displaying mixed signals this week, reflecting a highly indecisive market sentiment.

After its last automatic readjustment two weeks ago, which saw a decrease of 3%, Bitcoin network difficulty is expected to rebound and come close to setting a new record.

According to estimates from the Bitcoin education resource Bitrawr, difficulty should increase by around 1.2%.

In terms of hash rate, the current trend is a consolidation phase within a larger uptrend. Hash rate values differ widely depending on the source, but after achieving a new all-time high, activity has dropped in the last few weeks.

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CPI looms ahead of September Fed rate move

Outside of Bitcoin, the focus is on the upcoming U.S. CPI data for July, which is expected to be a major volatility catalyst on Aug. 10. The Kobeissi Letter predicts that “Inflation data this week should give more color as to what the Fed will do in September.”

In addition to the CPI, the July Producer Price Index will be released on Aug. 11, and S&P 500 companies will report their earnings throughout the week. While Bitcoin has become less sensitive to CPI data, the relationship between inflation and the crypto asset is still clear. As Swan’s Steven Lubka commented, “Amazing how if you shift Bitcoins price forward 9 months it literally tracks the rate of change in inflation exactly. It’s almost like it could see the future.”

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