Thursday marked a pivotal juncture for the cryptocurrency markets, as Bitcoin (BTC) failed to break through a critical resistance level despite encouraging U.S. inflation data, continuing the downward trend initiated in early June.

Following the announcement of the first decline in U.S. consumer prices in four years, markets swiftly adjusted their expectations for Federal Reserve rate cuts, buoying higher-risk assets, including BTC. Momentarily, it seemed Bitcoin bulls might gain traction above the descending trendline, marking the sell-off from June highs near $72,000. Such a breakthrough would have indicated an end to the retracement and potentially attracted momentum traders, as highlighted in Thursday’s First Mover America.

However, bullish aspirations were quickly thwarted as prices reversed from the trendline resistance, plunging below $57,000 early today. This latest setback, despite positive macroeconomic signals, suggests potential further price declines. A similar trendline rejection on July 1 exacerbated the sell-off.

Yet, there remains a glimmer of hope for the bulls. The daily chart’s MACD histogram, a tool for assessing trend strength and shifts, is hinting at a crossover above zero, indicating a possible bullish momentum shift.

The supply overhang from Germany’s Saxony state, which triggered the recent price drop, is nearly depleted. Additionally, the fate of the 95,000 BTC, part of the 140,000 BTC due for distribution to Mt. Gox’s creditors, remains uncertain in terms of liquidation.

“The potential influence of some of the $16.3 billion FTX repayment over the coming months translating into buying pressure, combined with a progressively positive crypto stance from both political parties, and the prospect of an interest rate cut in September benefiting risk assets more broadly, should bolster medium- and long-term bullish sentiment,” noted crypto prime broker FalconX in a Friday newsletter.

FalconX further elaborated that potential sales by Mt. Gox’s creditors might differ from Saxony’s liquidation pattern. “For instance, more of the flow might go to exchanges versus professional liquidity providers, or a more diversified holder base could spread sales over time,” FalconX observed.