Bitcoin (BTC) has been trading within a tight range for the past five days as traders reassess their risk strategy after the Aug. 5 crypto market rout while awaiting critical macroeconomic indicators in the coming days.
Period of calm after massive BTC liquidation event
Bitcoin fell to a six-month low of around $49,650 during the Aug. 5 global market rout. This decline followed an immediate recovery, which took the BTC price to the session high of around $72,730 on Aug. 8.
However, since then, Bitcoin has remained confined within the $58,000-$62,000 range, with its recovery momentum weakening, particularly near the key psychological resistance at $60,000.
This calmer environment reflects the market\'s adjustment to a post-liquidation landscape, paving the way for more measured and stable trading activity.
Notably, Bitcoin’s sideways trend appeared after the liquidation of more than $350 million worth of long and short positions since Aug. 5.
This period of turbulence saw a significant spike in Bitcoin\'s annualized realized volatility, which, as of Aug. 9, had reached its highest levels since March 2023.
The wave of liquidations effectively cleared out many leveraged positions, often a major source of heightened volatility. With these leveraged positions reduced, the market has experienced less extreme price movements, contributing to a more stable environment.
As the dust settles, traders and investors take the opportunity to reassess their strategies in light of the recent volatility. This reassessment has led to more cautious trading behavior, further supporting the stabilization of Bitcoin\'s price.
Consequently, both Bitcoin Futures open interest and volatility have declined significantly as the market has entered a period of sideways price consolidation.
US inflation suspense
Bitcoin’s period of stability appears in the days leading up to key US economic data releases, particularly the Consumer Price Index (CPI) on Aug. 14.
The inflation data will provide clues about the Federal Reserve’s interest rate path in the coming months. Notably, a decreasing CPI print could give the Fed room to cut rates in September, which may boost the market\'s appetite for non-yielding assets like stocks and cryptocurrencies, benefiting Bitcoin.
The opposite scenario is a higher CPI print and Fed’s hawkish reaction, which may lead to a lower demand for Bitcoin and other riskier assets.
Crypto traders are avoiding making large moves or opening new positions until the data provides clearer insights into the economic outlook. This caution reduces trading activity and, consequently, more stable prices, particularly in the summer month of August.
BTC price bull flag consolidation
Bitcoin\'s ongoing pride consolidation trend is occurring inside what appears to be a bull flag pattern, characterized by the formation of two parallel, downward-sloping trendlines after a strong upside move.
Bull flags typically resolve when the price breaks above their upper trendline and rises by as much as the length of the previous uptrend. Applying this technical rule to the current BTC/USD four-hour chart brings its upside target to $65,960.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.