The cryptocurrency market is currently experiencing uncertainty, with Bitcoin (BTC) nearing higher time frame lows on the daily, weekly, and monthly charts. Additionally, according to Bitfinex Alpha, there is a downward trend on the sub-timeframe charts for 1- to 15-minute intervals.
Market pressure and ETF outflows
One of the important factors causing this uncertainty is the significant oversupply in the market. This was highlighted recently when the German government put additional pressure on the market by selling confiscated BTC. Other notable overhang sources include Mt. There are Gox creditors and Bitcoin miners.
Moreover, US spot Bitcoin ETFs have been contributing to negative sentiment. Last week alone, there was a total outflow of $544.1 million. However, these outflows were mainly related to default/fund arbitrage liquidation rather than true sentiment for BTC. Historically, large sell-offs in ETFs often coincide with local lows in the price of Bitcoin, as noted in a previous version of Bitfinex Alpha.
Volatility and Market Capitalization
The overall market capitalization of cryptocurrency also showed a decline. A pattern has emerged with Thursday and Friday being the most volatile days. Last week, the decline from the current high to the low was about 5%, which is significant for Bitcoin. Historically, these movements often signal a local low, presenting traders with a potential buying opportunity.
However, the market is still in wait-and-see mode. In a near-term scenario, we could see continued pressure from BTC overhang selling or a positive sentiment shift triggered by the approval of an Ethereum ETF that could lead to a renewed interest in altcoins.
macroeconomic indicators
On the macroeconomic front, the U.S. economy is showing signs of cooling, as reflected in several key economic indicators. The latest Leading Economic Index report said consumer optimism is expected to decline and slow in the third and fourth quarters of 2024 due to continued inflation and high interest rates. Nonetheless, the job market is showing signs of stabilization and initial unemployment claims are modest. fell last week.
Significant pressure is also evident in the housing market, with housing starts in May plummeting to their lowest level since June 2020. Despite these challenges, retail sales showed modest but positive growth, suggesting consumer resilience, although growth was slower than expected.
The industrial sector remains a bright spot that continues to grow and potentially stabilize the overall economy. If economic growth slows and inflation trends continue, the Federal Reserve may consider cutting interest rates in September.
future prospects
Markets are becoming increasingly optimistic about inflation. The Fed’s five-year breakeven rate is 2.19%, close to the Fed’s target of 2%. With jobless claims rising slightly, housing starts slowing and retail sales growth slowing, interest rate cuts could be a welcome stimulus to the economy.
In recent crypto news, the German government’s sale of $195 million worth of Bitcoin contributed to the BTC drop last Friday. Major ETF providers such as BlackRock, VanEck, and Franklin Templeton are preparing to launch Ethereum ETFs, which could have a positive impact on market sentiment.
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