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Bitcoin Wavers Amid Fed Rate Cut Expectations

Bitcoin price remains in a downtrend even with investors anticipating Federal Reserve interest rate cuts. Here's why.

• Main Points:

  • Low CPI Impact: Consumer Price Index (CPI) rose by 3%, slightly below expectations, but Bitcoin prices stayed below $58,000.

  • Scalpers and Market Makers: Market manipulations and leveraged long liquidations are influencing Bitcoin's price.

  • Traditional Market Rally: Stocks and gold have rallied, yet Bitcoin stagnated.

  • Higher Rate Cut Odds: The increased likelihood of rate cuts hasn't boosted Bitcoin prices.

  • Other Influencing Factors: German government BTC sale, miner profitability issues, and recession fears.

• Detailed Insights:

  • Low CPI Impact: The CPI increase of 3% year-over-year in June, slightly below the market consensus of 3.1%, was seen as bullish for Bitcoin. However, this was not reflected in Bitcoin prices, which remained under $58,000.

  • Scalpers and Market Makers: Analyst Daan Crypto points out that scalpers and market makers are trying to liquidate leveraged longs, causing Bitcoin's price to weaken. Despite this, there's optimism for a rebound to $60,000.

  • Traditional Market Rally: Stocks and gold have shown positive movements with stocks nearing all-time highs and gold trading just below record levels. Bitcoin, however, has not mirrored this optimism.

  • Higher Rate Cut Odds: The CME Group’s FedWatch indicates a 47% chance of two interest rate cuts in 2024, up from 24% the previous week. Despite this, Bitcoin remains below $60,000.

  • Other Influencing Factors:

    • The German government sold nearly 50,000 BTC seized from a pirated movie website, contributing to market uncertainty.

    • Bitcoin miners are offloading holdings due to reduced block subsidies post-halving, with large miners selling $300M and mid-size miners $500M since June.

    • Recession fears, particularly from weaknesses in the Chinese real estate market, could lead to a shift towards cash positions, impacting Bitcoin negatively.

Related: Bitcoin Steadies at $58K, Altcoins Start Recovery

These combined factors are why Bitcoin has struggled to reclaim the $60,000 support level despite a seemingly favorable macroeconomic backdrop.

Bitcoin Traders Hit by 'Extreme Fear

Bitcoin repeatedly fails to reclaim the $60,000 level as the Fear and Greed Index plummets to "extreme fear."

• Main Points:

  • Extreme Fear Sentiment: Fear and Greed Index hits 25, the lowest in 18 months.

  • Market Pressures: Mt. Gox repayments and the German state of Saxony's BTC sales impact prices.

  • Failed Breakout: Bitcoin surged to $59,516 but failed to break the $60,000 resistance.

  • ETF Inflows: Positive sentiment from ETF inflows, notably BlackRock's IBIT.

• Detailed Insights:

  • Extreme Fear Sentiment: The Fear and Greed Index, a key Bitcoin sentiment indicator, has plunged to 25, marking its lowest point in 18 months. The last similar reading was during the market's recovery from the FTX exchange collapse.

  • Market Pressures: The market faces pressure from Mt. Gox repayments and continuous BTC sales by the German state of Saxony. On Thursday, Saxony offloaded another $286 million worth of BTC, contributing to the market's instability.

  • Failed Breakout: Despite a price surge to $59,516 due to lower-than-expected US inflation data, Bitcoin couldn't maintain the momentum to break through the $60,000 resistance level, partly due to ongoing selling pressure from Saxony.

  • ETF Inflows: A bright spot is the steady inflow of funds into Bitcoin exchange-traded funds (ETFs), with Thursday seeing nearly $79 million in fresh money, mostly attributed to BlackRock's IBIT.

Related: Bitcoin Whales Buy Big as Price Hits 4-Month Low

The continued selling by the German state and other market factors are key reasons why Bitcoin struggles to sustain higher levels despite positive macroeconomic indicators.

VanEck CEO Shares Bullish Views on Bitcoin and Gold

VanEck CEO Jan van Eck shares his optimistic views on Bitcoin and gold, highlighting their strong fundamentals and appeal amid market volatility.

• Main Points:

  • Small-Cap Performance: Significant rise in Russell 2000.

  • Market and Government Spending: Impact of government spending and low unemployment.

  • Fiscal Policies: Potential tax policy changes and Federal Reserve pressure.

  • Bitcoin’s Volatility: Long-term bullish outlook despite short-term fluctuations.

  • Gold Market: Record highs driven by geopolitical tensions and central bank purchases.

  • Future Outlook: 2025 fiscal challenges and continued Federal Reserve easing.

• Detailed Insights:

  • Small-Cap Performance: Van Eck discussed the Russell 2000's notable 3% gain, its best day since December. He highlighted the uncertainty of whether this surge marks a sustained trend or just a one-day reversal.

  • Market and Government Spending: He emphasized the significant role of government spending and low unemployment rates in preventing a recession and maintaining interest rates. Van Eck believes these factors pressure the Federal Reserve to adopt stimulative policies.

  • Fiscal Policies: Van Eck pointed out potential fiscal challenges, including possible tax policy changes post-elections, which could influence the Federal Reserve to ease monetary policy, benefiting small-cap stocks.

  • Bitcoin’s Volatility: Van Eck acknowledged Bitcoin's recent volatility, with spikes and drops typical for risk assets. He remains bullish on Bitcoin due to strong fundamentals like the halving event and anticipated Federal Reserve easing policies.

  • Gold Market: Gold prices have reached record highs, driven by geopolitical tensions and central bank purchases. Van Eck noted a lack of significant inflows into U.S.-based gold ETFs, with most buying from foreign central banks.

  • Future Outlook: Looking ahead, Van Eck anticipates 2025 fiscal challenges, particularly related to Social Security. He expects these issues to be addressed post-election, with continued Federal Reserve easing supporting both gold and Bitcoin.

Related: Kiyosaki Recommends Bitcoin Despite Missing $350K Prediction

The ongoing fiscal and market dynamics underscore Van Eck's bullish stance on Bitcoin and gold as attractive investment alternatives amid economic uncertainty.

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This article is not financial advice. Market conditions can change rapidly, and past performance does not guarantee future results