Our experts have analyzed the market situation and told how it may change this week for Bitcoin
In the week ending June 9, bitcoin made an attempt to consolidate above $70 thousand. And it almost succeeded. From June 4 through June 7, bitcoin traded above that mark and tested the next hurdle at $71,000. But on Friday, the market reversed sharply and bitcoin returned to the range below $70,000.
On June 4, bitcoin rose sharply from $69,080 to $70,800. Bitcoin's mid-week rise was fueled by a wave of optimism that a key U.S. rate cut was imminent. For investors, the monetary policy of the U.S. regulator remains the main factor affecting the state of the crypto market.
Market participants were encouraged by the data on the decline in inflation, which was published earlier. And hoped that the unemployment report, which was expected on Friday, June 7, would show a decline in business activity. And the rate of economic growth in the U.S., which would prompt the U.S. Federal Reserve to make two cuts in the key rate to stimulate the economy. The rate hike was also helped by statistics on capital inflows into spot bitcoin-ETFs. On June 3, the second largest net inflow into the funds was recorded at $887 million.
But the report on the situation in the U.S. labor market, published on June 7, threw many into confusion. On the one hand, the number of applications for unemployment benefits in the U.S. grew stronger than expected - up to 229 thousand instead of the expected 220 thousand. On the other hand, the number of jobs in the non-farm sector (NFP) in the U.S. increased by 272 thousand in May against the expected 185 thousand. And that indicates that the US economy is doing well in the high key rate environment. This, in turn, reduced the probability of interest rate cuts.
If before the publication of the report participants estimated the probability of a rate cut at the September Fed meeting at 67%, after the release of the employment data hopes fell to 55%, according to FedWatch CME Group surveys. The likelihood that there will be two key rate cuts in 2024 also fell, from 66% to 51%.
The crypto market immediately reacted with a sharp correction to the unemployment and employment data. Bitcoin lost nearly $3,000 in two hours and almost touched the $68,000 level. But rebounded and has been trading just above $69,000 since Friday.
This week we can expect increased volatility in bitcoin and the entire crypto market around key events.
Important events will also concern the main factor of possible growth or fall of the crypto market - monetary policy in the United States.
On June 12, there will be a meeting of the Federal Open Market Committee. And where the rate will be discussed. Although none of the market participants are expecting a decision to lower the key rate at the June meeting, everyone hopes to hear signals that this process will start in the foreseeable future.
June 12 will also see the publication of the consumer price index, which is considered one of the main indicators taken into account by the regulator when discussing the key rate. In May, the index decreased by 0.1 percentage points to 3.4%. But even such a slight decline had a positive impact on the mood of traders.
If consumer prices show a decline again, it may signal to the market that the key rate will start to decrease in the fall. And this means an increase in appetite for risky assets. In this case, bitcoin may regain the positions lost after the publication of the unemployment report and once again overcome the $71,000 mark.
It is possible that in the case of this optimistic scenario, the wave of optimism will increase inflows into spot bitcoin-ETFs, and by the end of next week bitcoin will approach $75,000. $BTC