Bitcoin derivatives markets show less appetite for bullish positions. Is BTC price at risk?
Bitcoin briefly flirted with the $72,000 resistance on June 7, but its intraday gains quickly evaporated, sending the cryptocurrency down to $69,000. More worryingly, two indicators, including the long-to-short ratio of top traders on exchanges, suggest that Bitcoin investors are becoming less optimistic. Is the Bitcoin bull market coming to an end, at least in the short term?
Bitcoin and gold down amid S&P 500 all-time high
The S&P 500 index hit a new all-time intraday high on June 7 after the United States reported an increase of 272,000 jobs in nonfarm payrolls in May, significantly surpassing the previous month's figure of 165,000 jobs. A strong labor market is generally beneficial for credit and consumption, and therefore for publicly traded companies. People are more likely to spend when the labor market is resilient, regardless of the cost of capital.
The relationship between job creation and corporate profits is particularly favorable, especially since the US Bureau of Labor Statistics reported that wages rose 0.4% in May from the previous month, with older workers taking part. productive, from 25 to 54 years old, reaching its highest level in 22 years, with 83.6%. Despite the decline in consumer stocks in the US today, the technology sector more than offset the move.
Robert Sockin, senior global economist at Citi, noted that the longer the US Federal Reserve (Fed) keeps interest rates above 5.25%, the greater the risk of a recession, as reported by Yahoo Finance. . However, there is no indication of an imminent risk based on the most recent US unemployment data, which stands at 4%. According to CME's FedWatch tool, investors are currently pricing in a 51% chance that the Fed will cut rates by September, up from 69% the previous day.
Bitcoin was not the only asset class negatively impacted by macroeconomic data and reduced investor expectations for interest rate cuts. Gold fell to $2,300 after flirting with $2,390 in the early hours of June 7. Similarly, the two-year US Treasury yield jumped from 4.74% to 4.87% over the same period, indicating that traders are exiting their fixed income positions.
While it may seem inconsistent that Bitcoin has fallen following gold and fixed income as the stock market decoupled, consider that the largest US-listed companies hold a combined $3.6 billion in cash and equivalents. These holdings can generate returns in money market funds or be used in stock repurchase programs. Essentially, even if corporate profits suffer, the price impact will be much smaller compared to other assets.
