BTC price weakness shows as Bitcoin analysts debate the likelihood of a return toward $20,000.
Bitcoin price breaks from range with drop below $28K, and options tilt toward BTC bears
$570 million in weekly BTC options expire on Friday, and the recent macro and crypto news events have further tilted the advantage to bearish traders.
BTC price breakout by end of August? 5 things to know in Bitcoin this week
Bitcoin stays frustratingly quiet after the weekly close, but BTC price forecasts are giving ever-shorter breakout deadlines.
Goldman Foresees Q2 2024 Fed Rate Cut: A Boost For Bitcoin?
In a recent note that has caught the attention of both traditional financial markets and the Bitcoin community, Goldman Sachs economists, including the renowned Jan Hatzius and David Mericle, have made a significant prediction regarding the Federal Reserve’s monetary policy. The note suggests that the Federal Reserve may commence a series of interest rate cuts by the end of June 2024.
“The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target,” the Goldman economists wrote. This statement underscores the bank’s belief that the Federal Reserve’s current stance on interest rates may be too restrictive, especially if inflation rates continue to trend towards the central bank’s target.
The note further elaborates: “Normalization is not a particularly urgent motivation for cutting, and for that reason we also see a significant risk that the FOMC will instead hold steady.” This cautious tone suggests that while Goldman Sachs is predicting a rate cut, they also acknowledge the unpredictability of the Federal Reserve’s decisions.
The recent data, which showed US inflation rising at a slower-than-expected rate of 3.2%, with the core consumer price index at a 4.7% annual pace, further complicates the picture. With the Fed’s benchmark rate currently set between 5.25% to 5.5%, Goldman Sachs expects it to stabilize around 3 to 3.25%.
What Does This Mean For Bitcoin Price?
Expectations of a rate cut from Goldman Sachs are in line with market expectations according to the CME FedWatch Tool. In May 2024, 68% already expect there to be at least a 25 basis point (bps) rate cut.
However, it remains to be seen whether macro events will influence the Bitcoin price again. In the last few months, BTC increasingly decoupled from macro events while the stock market rallied towards all-time highs and stagnated around the $30,000 mark.
Interestingly, the timing could be very positive for the Bitcoin market. On the one hand, March 15, 2024 is the final deadline for spot Bitcoin ETF filings from BlackRock, Fidelity, Investco, VanEck, and WisdomTree; on the other hand, Bitcoin halving is coming up at the end of April (currently expected on April 26).
The high expectations for these two events, coupled with a dovish monetary policy from the Federal Reserve, could be a massive catalyst for the Bitcoin price.
At press time, BTC traded at $29,426 and saw another calm weekend amid the liquidity summer drought. Breaking above $29,550 is key to establish any bullish momentum to initiate another push towards $30,000.
Bitcoin hugs $29.5K into CPI as odds split over new US inflation spike
Bitcoin looks set to benefit little from the latest CPI figures, analysts warn, with fresh BTC price losses firmly on the cards.
Bitcoin price erases FOMC gains as US dollar surges on Q2 GDP print
Bitcoin casts off a U.S. GDP “nothingburger” but DXY charges to two-week highs in what is traditionally a BTC price headwind.
Fed’s No Recession Claim Boosts Bitcoin And Crypto, Historical Data Contradicts
Arguably the most important takeaway from yesterday’s FOMC meeting was that the U.S. Federal Reserve (Fed) is no longer forecasting a recession, which led to a cautious rally in Bitcoin and crypto markets today. Fed Chairman Jerome Powell’s statement during the FOMC press conference seems to have eased investor concerns, leading to a swift recovery in both tradfi and crypto. However, historical data suggests that caution may be warranted as the potential for recession remains a looming concern (although Powell said otherwise).
Signals For A Recession Remain Strong
Prominent financial experts have raised their voices about the current economic situation. Steven Anastasiou, a noted economist, warns about the significance of the recent decline in the annual average M2 growth, which stands at -2.7% YoY. He draws parallels with some of the most challenging economic periods in history, stating, “With M2 falling, history suggests that continuing with aggressive tightening is a dangerous proposition… a falling M2 money supply has generally been correlated with economic depressions & panics.”
Anastasiou also highlights the deflationary pressures in the economy, as reflected by the 12 consecutive monthly declines in the US Consumer Price Index (CPI) growth rate. Drawing parallels to a deflationary bust seen in 1920-21, he emphasizes that “now is not the time to be delivering any additional tightening.” As we know, Powell did the opposite yesterday, raising the federal funds rate to a level not seen in 22 years.
Jurrien Timmer, director of global macro at financial giant Fidelity, shared insights from historical data on recessions. He notes that the lead times between changes in monetary policy and the subsequent economic consequences can vary significantly. Looking at past cycles, he observes, “The monetary policy cycle tends to lead the economic consequences to varying degrees.” The lead time ranged from 2 months to as much as 19 months, depending on the economic circumstances.
During the 1970 cycle (when structural inflation was getting underway and the Nifty Fifty was born), “peak policy” led the recession by 19 months. In 1973-74, it was only 2 months. In 1990, (the S&L crisis), it was 16 months. In 2001, (tech bubble) it was 3 months, and in 2008 (GFC) it was 14 months.
Another warning signal is the inverted yield curve, known for reliably foreshadowing economic recessions. The inverted yield curve is currently hitting levels unseen in over 40 years (since 1981), screaming recession. Gold bug Peter Schiff therefore remarked:
The talking heads on CNBC all agree that if the U.S. enters recession, it will be a baby recession. Not only is recession a certainty, but it won’t be a baby. It will be the grand daddy of recessions. It will be so large that a more appropriate term to use will be a depression!
Impact On Bitcoin And Crypto
Amidst these economic concerns, the crypto is writing green numbers across the board. However, a recession is meaning uncertainty for Bitcoin. Unlike traditional assets, Bitcoin has not experienced a recession, leaving investors uncertain about its resilience in times of economic turbulence. While some tout Bitcoin’s “safe haven” potential, others argue that it might behave more like a risk asset, making it less attractive during a recession.
Macro analyst Henrik Zeberg and the founders of Glassnode, Yann Alleman and Jan Happel, believe that “we are going to have the largest Crisis since 1929. First Deflation – later Stagflation. But first – #BlowOffTop”. In this scenario stocks, Bitcoin and crypto could rally hard before a recession “suddenly” hits the market.
However, no one knows how the economy will react this time. Therefore, the coming two months and their macro data (CPI, PCE, jobs, unemployment rate, earning, etc.) will be indicators for Bitcoin and crypto investors to follow (just as J-Pow tirelessly repeated yesterday – “data dependency”).
At press time, the Bitcoin price continued its slow grind up, trading at $29,523.
Federal Reserve Hikes Fed Funds Rate by 25 Basis Points
The move was fully anticipated by market participants who will now look to Chairman Jerome Powell’s imminent post-meeting press conference for clues about whether the central bank intends to continue tightening monetary policy.
Crypto Catalysts: Likely Rate Hike on the Menu as FOMC Begins Latest Monetary Policy Deliberations
The U.S. central bank has been telegraphing its intent in the weeks after halting rate increases last month for the first time in over a year. ThePersonal Consumption Expenditures report arrives Friday, but cryptos and other risk-on assets have been largely immune to macro events.
Crypto Catalyst Watch: FOMC Minutes, Jobs Numbers Lead Busy Slate of Economic Releases
In addition, the national ISM manufacturing survey, released during the long July 4 weekend, fell to its weakest level since May 2020.
Bitcoin price data suggests bulls will succeed in holding $30K as support this time
Two key Bitcoin price metrics suggest that bulls will be able to hold the $30,000 level as support.
Bitcoin Sinks to 25.5K, Altcoins Tumble, as Investors Shrug Off Fed Rate Hike Pause
Ether tumbled below $1.7K just two hours after the U.S. central bank met widespread expectations by ending its more than year-long diet of interest rate increases.
Fed Leaves Policy on Hold, Ending Long String of Rate Hikes
The U.S. central bank signaled it might restart rate hikes in coming months if inflation doesn’t continue to recede.
Bitcoin’s Doldrums Below $26.5K Endure as Investors Weigh Debt Ceiling Stalemate, Latest FOMC Minutes
The largest cryptocurrency by market capitalization sank below $26.2K early Wednesday after disappointing U.K. inflation data.
The Need for Clarity in Washington – Not Just on Crypto
The recent ambiguous messaging from the Federal Open Market Committee’s meeting, which left markets struggling to interpret signals from the FOMC statement and Chair Jerome Powell’s comments, is typical of the abstruse signals that can be found in central bank policy-setting. But new tools, such as blockchain’s cryptographic verification systems, could guide policymakers’ decisions.
Bitcoin Falls Slightly After Fed Rate Hike
BTC was down about 1% after the U.S. central bank boosted the Federal Funds rate by 25 basis points. Fed Chair Jerome Powell noted that the central bank had omitted language signaling rate hikes at upcoming meetings.
Bitcoin limps into FOMC as flagging volume adds to BTC price hurdles
Bitcoin’s price looks unlikely to break out as markets brace for Fed rate hike volatility.
Federal Reserve Hikes Rates by 25 Basis Points
Recent bank failures had market participants questioning if the U.S. central bank would follow through with its previous intention to further tighten monetary policy.
Bitcoin $30K bets greet FOMC as analyst warns over long liquidations
Bitcoin may celebrate no matter what the Fed decides on interest rates, but the extent of longs that would be liquidated below $20,000 has one analyst worried.