Bitcoin Forecast: BTC holds steady at 58k as recession fears ease, but distribution caution remains

• US recession fears ease after stronger-than-expected retail sales, jobless claims 

• A tight US election race caps BTC gains 

• Mt Gox & US Government crypto distributions in focus 

• Attention turns to the Jackson Hole Symposium next week 

Bitcoin is holding steady above 58,000 after two straight days of declines, during which the world’s largest cryptocurrency dropped by over 5%. Still, the cryptocurrency is on track to gain around 1% this week as it trades firmly within the familiar 50K to 60K range. 

US recession fears ease after strong retail sales, jobless claims data 

The Bitcoin selloff has steadied after stronger-than-expected US retail sales data, which has helped to further ease fears of a US recession. Yesterday’s data showed that US retail sales rebounded by 1% month over month in July, having stalled at 0% in June.  

Meanwhile, US jobless claims fell for a second straight week, according to data from the US Labour Department. Initial claims, which measure the number of people claiming unemployment benefits for the first time, decreased by 7k to 227k in the week ending August 10th. This was below the 235k applications that economists had expected. This marked the lowest level for jobless claims since July. 

The stronger retail sales and lower jobless claims, combined with last week’s cooling inflation data, have boosted confidence that the US could avoid a recession. 

Risk assets, including U.S. stocks, have performed well as recession fears have retreated. The Dow Jones once again topped the 40k level, while the S&P 500 has added nearly $4 trillion in market cap since the August 5th bottom. 

 Tight US election race caps Bitcoin gains 

Despite the upbeat data and the rise in riskier assets such as stocks, gains in Bitcoin have been limited this week owing to supply fears. Concerns over more Mt Gox distributions, a possible US government dump, and uncertainty around the political outlook have weighed on demand. 

Uncertainties surrounding the US presidential election are prompting a certain level of caution regarding cryptocurrencies. The latest polls show that Kamala Harris and Donald Trump are tied in the 2024 race for the White House. However, only Donald Trump has so far shown a pro-crypto stance. 

Bitcoin Mt Gox & government distributions  

Meanwhile, distributions from Mt Gox are also keeping gains capped. Not only is the defunct crypto exchange Mt Gox expected to release its final tranche of Bitcoin to its creditors, but there are also signs that the US government could be moving Bitcoin holdings ahead of a government dump. 

According to on-chain data, a Bitcoin address that received 10,000 Bitcoin from a U.S. government wallet two weeks ago moved the tokens to a Coinbase prime deposit wallet earlier in the week. The Bitcoin moved in the transaction was part of the crypto seized from the dark web market Silk Road, which is equivalent to over $592 million. 

Markets are bracing themselves for a government dump. The German government carried out a similar move, selling nearly 50,000 bitcoins after closing a piracy platform, Movie 2K. This contributed to Bitcoin’s price falling around 17% between mid-June and mid-July. However, Bitcoin is showing more resilience this time over a possible government move, despite falling 5% in the previous 2 days the selloff has steadied. 

Jackson Hole symposium 

Attention will now turn towards the US Jackson Hole central bank symposium next week, where Fed Chair Jerome Chair could lay out the Fed’s plans to steadily reduce interest rates. A lower interest rate environment is beneficial for Bitcoin owing to increased liquidity. 

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