Bitcoin (BTC), the world’s leading cryptocurrency, has continued its downward trend, trading around $67,925 and hitting an intraday low of $67,786. This 2.5% decline has raised concerns about a potential larger sell-off.
Market Reaction to U.S. Employment Report
The drop is largely attributed to a robust May employment report from the U.S., which revealed an addition of 272,000 jobs, diminishing hopes for a rate cut by the Federal Reserve. The strong job growth has bolstered the U.S. dollar and driven up Treasury yields, contributing to Bitcoin’s losses. Investors are now closely monitoring Bitcoin price predictions, with many speculating on its next move amid these developments.
ETF Inflows and Market Volatility
Despite significant investment in Bitcoin ETFs, with $886.6 million in daily inflows, Bitcoin’s value has struggled to stay above $70,000. This drop was driven by traders exploiting price differences through arbitrage between ETFs and CME Bitcoin futures. Additionally, Robinhood’s acquisition of Bitstamp aims to bolster its global crypto presence.
Semler Scientific is following Microstrategy’s strategy by investing in Bitcoin as part of its treasury assets. Market watchers are keenly observing CPI data and comments from Fed Chair Jerome Powell for insights into potential rate cuts.
Bitcoin’s inability to sustain above $70,000, despite significant ETF investments, highlights market vulnerability. Arbitrage opportunities and anticipation of Powell’s remarks on rate cuts are key factors impacting Bitcoin’s price volatility.
Impact of Strong U.S. Dollar and Positive Job Data
A robust May employment report, showing 272,000 jobs added, bolstered the U.S. dollar and led to a drop in Bitcoin prices. The Nonfarm Payrolls report exceeded expectations, reducing the likelihood of a September rate cut from 70% to around 50%.
This caused Treasury bond yields to rise and the U.S. dollar to reach its highest level in nearly a month. Investors now expect only one 25-basis-point reduction later in the year, possibly in November or December.
Average Hourly Earnings increased by 4.1% over the past year, surpassing expectations. This could lead to higher prices and prompt the Federal Reserve to maintain higher interest rates longer. Consequently, the stronger U.S. dollar and positive job data pushed Bitcoin prices lower.
Federal Reserve’s Projections and Budget Deficit
Bitcoin (BTC/USD) has experienced a notable dip, with its price declining to $67,850. A significant factor behind this drop is the recent economic data and projections from the U.S. Federal Reserve.
The Federal Funds Rate remains at 5.50%, maintaining high borrowing costs. The Federal Open Market Committee (FOMC) economic projections and statement highlighted persistent inflationary pressures and the potential for sustained high interest rates, which spooked investors.
Additionally, the Federal Budget Balance showed a substantial deficit of -$259.3 billion, a stark contrast to the previous surplus of $209.5 billion. This negative fiscal data adds to concerns about the U.S. economic outlook, further strengthening the U.S. dollar and increasing Treasury yields.
These developments have negatively impacted Bitcoin, as a stronger dollar and higher yields typically divert investment away from riskier assets like cryptocurrencies. Consequently, Bitcoin’s price has been under pressure, reflecting broader market reactions to these economic indicators.
Bitcoin Price Prediction
Bitcoin (BTC/USD) is currently trading with a dramatic bearish bias, with the pivot point standing at $68,350, suggesting a bearish outlook.
Immediate resistance levels are observed at $69,200, $70,150, and $71,100. On the downside, immediate support is at $67,850, with further support at $66,600 and $65,900.
Technical indicators also reflect a bearish outlook. The Relative Strength Index (RSI) is at 31, indicating oversold conditions and potential for further downward movement.
The 50-day Exponential Moving Average (EMA) is at $69,500, showing that the current price is significantly below this average, signaling sustained bearish pressure.
A bearish engulfing candle on the 4-hour timeframe, especially below the $68,350 level, suggests a continuation of the downward trend. Both RSI and EMA indicators support this bearish stance.
In conclusion, Bitcoin remains bearish below $68,350. A break above this level could shift momentum towards a bullish bias, but current indicators favor continued decline.
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