Bitcoin (BTC) continues to rise, with prices climbing to around $67,900. The core PCE price index, an inflation indicator that the Federal Reserve focuses on, rose 0.2% month-on-month in April, which was in line with market expectations but slowed down from the 0.3% increase in the previous month. This modest growth may have eased the Fed's concerns about inflation to some extent, but in order to ensure a possible interest rate cut in September, the Fed still needs a series of consistent data support.

At the same time, the Chicago PMI index unexpectedly fell to 35.4, far below the expected 41.1, indicating that manufacturing activity is weakening. These complex data sets show that the current economic environment is full of uncertainty, inflationary pressures seem to have eased, but economic activity is showing signs of slowing down. These factors work together to make the market optimistic about the future trend of Bitcoin prices.

US inflation data and potential Fed rate cuts

Bitcoin (BTC) maintained its upward momentum, rising to around $67,900. The core PCE price index, the Federal Reserve’s preferred inflation indicator, rose 0.2% month-on-month in April, in line with expectations but down from a 0.3% increase in the previous month.

The small increase could ease some of the Fed's concerns about inflation, but consistent data is needed to support a rate cut by the Fed before September.

  • Core PCE price index monthly rate: 0.2% (expected 0.3%)

  • Chicago PMI: 35.4 (previous value: 37.9)

The Chicago PMI fell to 35.4, below the forecast of 41.1, indicating weakening manufacturing activity. The data pointed to a mixed economic outlook, with inflation showing signs of easing while economic activity slowed.

The data affects the price of Bitcoin because if inflation continues to ease, the likelihood of a Fed rate cut in September becomes greater, which could weaken the dollar and support BTC prices.

Disappointing US GDP data supports Bitcoin price

Much of the BTC price rally can also be attributed to a weaker U.S. dollar, which lost its appeal after disappointing U.S. GDP data. The weak GDP data prompted traders to expect the Federal Reserve to cut interest rates this year, which put pressure on the dollar and boosted BTC.

key point:

  • Chicago Fed President Austan Goolsbee highlighted concerns about housing inflation and a strong labor market.

  • Atlanta Fed President Raphael Bostic said a rate cut in July is unlikely due to slow progress in inflation.

  • New York Fed President John Williams is optimistic that inflation will ease later this year.

U.S. economic data showed that GDP grew at an annualized rate of 1.3% in the first quarter, lower than the previous value of 1.6%, but in line with expectations.

In addition, the number of initial jobless claims in the United States rose slightly to 219,000 last week, higher than the market expectation of 218,000. These factors, coupled with the expectation of a rate cut by the Federal Reserve, have enhanced the appeal of Bitcoin.

Bitcoin price volatility affected by mixed sentiment in spot Bitcoin ETF market

As of May 30, 2024, investor sentiment in the spot Bitcoin ETF market was mixed, with the total investment amount reaching US$48.71 million.

Among them, iShares, owned by BlackRock, attracted $2 million in capital inflows, demonstrating continued investor interest in the product. Fidelity's capital inflows were unusually significant, reaching $119 million, which clearly reflects investors' strong trust and favor for Fidelity and its products. In addition, Bitwise also successfully attracted US$26 million in capital inflows, which further proves that investor confidence in the company's products is gradually increasing.

key point:

  • BlackRock’s iShares: $2 million inflows

  • Fidelity: $119 million in inflows

  • Bitwise: $26 million inflow

  • ArkShares: $100 million divestment

  • Invesco: $2 million in inflow

However, ArkShares saw a massive $100 million outflow, a sign that investor sentiment may be shifting, while Invesco maintained steady interest in the market, seeing $2 million in inflows.

At the same time, institutions such as WisdomTree, Grayscale, Franklin, Valkyrie and VanEck have not made any new investment moves in the spot Bitcoin ETF market, which may be attributed to the fierce competition in the current market and changes in investor preferences.

The mixed investment flows in these spot Bitcoin ETF markets clearly demonstrate the diversity of investor sentiment, which can exacerbate BTC price volatility. The massive inflow of funds undoubtedly boosts market confidence, while the wave of withdrawals brings market uncertainty, which in turn affects Bitcoin's price dynamics.

Bitcoin (BTC/USD) Technical Outlook: June 1, 2024

Bitcoin (BTC/USD) is currently trading around $67,900, up slightly by about 0.25%.

The pivot point, marked in green, is set at $68,100 and is a key indicator of potential market direction. Immediate resistance levels are located at $68,800, $69,800, and $70,600.

On the downside, an immediate support is at $67,500 and further support is found at $66,600 and $65,900.

Technical indicators show the relative strength index (RSI) at 46.94, suggesting neutral to bearish sentiment.

Bitcoin Price Prediction

In technical analysis, the 50-day exponential moving average (EMA) coincides with Bitcoin’s $68,100 pivot point, highlighting the price as a key dynamic support point.

If the price of Bitcoin falls below this important support level of $68,100, the market outlook will be bearish. In particular, if the price falls further below the immediate support level of $67,500, this could trigger a larger decline. However, if Bitcoin can successfully break through $68,800, it will be a positive sign that could prompt the market sentiment to turn bullish and push the price towards higher resistance levels.