Bitcoin Price Forecast amid 2.5% Decline – Is a Major Sell-Off on the Horizon?
Arslan Butt
Updated:
June 11, 2024 05:35 EDT
|
4 min read
Bitcoin Price Forecast
The price of Bitcoin (BTC), the dominant cryptocurrency worldwide, continued its downward trend, hovering around $67,925 and hitting a low of $67,786 during the day. This recent drop of 2.5% has raised concerns about a potential larger sell-off.
The decline can be attributed to the strong US employment report for May, which revealed the addition of 272,000 jobs, diminishing hopes for a Federal Reserve rate cut.
The robust job growth has strengthened the US dollar and increased Treasury yields, leading to losses in Bitcoin. As investors grapple with these events, speculation about the future movement of Bitcoin’s price remains a hot topic.
Bitcoin Price Volatility Due to ETF Inflows and Market Changes
Despite significant investments in Bitcoin ETFs, with daily inflows of $886.6 million, the price of Bitcoin could not sustain above $70,000. This downward trend was driven by traders taking advantage of price differentials through arbitrage between ETFs and CME Bitcoin futures. Moreover, Robinhood’s acquisition of Bitstamp aims to enhance its global presence in the cryptocurrency market.
Semler Scientific is emulating Microstrategy’s approach by including Bitcoin in its treasury assets. Market observers are closely monitoring CPI data and statements from Fed Chair Jerome Powell for insights into potential rate adjustments.
Bitcoin’s failure to maintain levels above $70,000 despite substantial ETF investments underscores the market’s susceptibility. Traders capitalizing on arbitrage opportunities and anticipation of Powell’s comments on rate cuts are key factors influencing Bitcoin’s price volatility.
Effect of Strong US Dollar and Positive Job Data on Bitcoin Prices
The robust May employment report, which showed the addition of 272,000 jobs, boosted the US dollar and led to a decline in Bitcoin prices. The Nonfarm Payrolls report exceeded expectations, reducing the probability of a rate cut in September from 70% to around 50%.
This resulted in an increase in Treasury bond yields and the US dollar reaching its highest level in almost a month. Investors now anticipate only one 25-basis-point reduction later in the year, possibly in November or December.
Average Hourly Earnings rose by 4.1% over the past year, surpassing projections. This could lead to higher prices and prompt the Federal Reserve to maintain higher interest rates for a longer period. Consequently, the stronger US dollar and positive job data pushed Bitcoin prices lower.
In summary:
– Strong US dollar and solid job data led to a decline in BTC price.
– Investors adjusted their expectations for rate cuts, causing Treasury yields to rise.
– The Federal Reserve’s Economic Projections and Budget Deficit Trigger a Bitcoin Downturn
Bitcoin (BTC/USD) experienced a significant decline, dropping to $67,850. A key factor behind this drop is recent economic data and forecasts from the US Federal Reserve.
The Federal Funds Rate remains at 5.50%, resulting in high borrowing costs. The Federal Open Market Committee (FOMC) projections and statement highlighted persistent inflationary pressures and the possibility of sustained high interest rates, unsettling investors.
Additionally, the Federal Budget Balance showed a substantial deficit of -$259.3 billion, contrasting with the prior surplus of $209.5 billion. This negative fiscal data raises concerns about the US economic outlook, further bolstering the US dollar and increasing Treasury yields.
These developments have adversely affected Bitcoin, as a stronger dollar and higher yields typically divert investments away from riskier assets like cryptocurrencies. Consequently, Bitcoin’s price has been under pressure, reflecting broader market reactions to these economic indicators.
Bitcoin Price Forecast
Bitcoin (BTC/USD) is displaying a strong bearish bias, with the pivot point at $68,350 indicating a bearish Bitcoin price forecast.
Immediate resistance levels are noted 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 suggest a bearish outlook. The Relative Strength Index (RSI) at 31 signals oversold conditions and potential for further downward movement.
The 50-day Exponential Moving Average (EMA) at $69,500 indicates that the current price is significantly below this average, indicating sustained bearish pressure.
A bearish engulfing candle on the 4-hour timeframe, especially below the $68,350 level, indicates 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.
Bitcoin Price Forecast – Source: TradingView
Bitcoin Price Forecast 2024 – 2034
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Disclaimer: Cryptocurrency is a high-risk asset class. This article is provided for informational purposes only and does not constitute investment advice. You could lose all of your capital.
