Bitcoin has led the cryptocurrency market downturn by returning to $65,000 after not retesting its previous high. all-time high In March, $73,700 was reached.
Michael van de Poppe is an industry expert who sheds light on why this market has been in a state of bloodbath.
Crypto Market Battles and Uncertainties
Key event highlighted van de Poppe has written about the Consumer Price Index Data released last Wednesday, which had a significant impact on Federal Reserve’s decisions on interest rates.
Data that came in below expectations favored risky assets. The data, which came in lower than expected (headline CPI 3.3% vs. expected 3.4%) and core CPI 3.4% vs. expected 3.5%), favored risk assets. rate cuts Positive outlooks for rate cuts in the future, provided favorable market conditions.
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A significant release was that of Producer Price Index (PPI), a measure of inflation from the point-of-view the producers. This data showed a regular PPI score lower than anticipated of 2,2% (versus expected 2.5%), and a Core PPI year-on-year score of 2,3% (versus expected 2.4%).
Also, monthly data Negative figures were also recorded, favoring assets with a higher level of risk. Van de Poppe, however, claims that the market for cryptos has not changed its trend despite positive indicators.
Van de Poppe says that Friday’s release of consumer confidence data also had an impact on the market. Market strength is measured by consumer sentiment. This data was lower than anticipated, with an overall score of 65.6, compared to an estimated 72.1.
The data showed a weakening economy, which could have fueled a bullish mood for assets that were risky and led to an increase in crypto markets.
Jerome Powell of the Federal Reserve gave an unanticipatedly hawkish address. The data does not support the idea of rate cuts. worsening economic conditionsPowell’s tone remained hawkish and he revised his estimate of the rate cut that could be made in 2024.
Michael van de Poppe said that this forecast did not bode very well for markets. It added to the uncertainty and price volatility of recent days.
Bitcoin’s price continues to struggle as bond yields drop
Analysts also pointed out the decline in Market Indicators, including Treasury Bond Yields. The 2-year Treasury Bond Yield Dropped to its lowest point for two months while 10-year Yield continues to drop to the lowest since early April.
This indicates that Bitcoin is in a favorable environment, and other risky assets are likely to be as well. Therefore, there’s a greater chance of an upcoming rate reduction. The strength of the US Dollar was maintained due to the rate reduction by the European Central Bank.
Van de Poppe is convinced that the unexpected strength of the Dollar, driven by ECB actions, has further complicated the situation. market dynamicsUsually, rate reductions are necessary for the stability of an economy.
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As a result, Bitcoin and the entire cryptocurrency market have declined significantly as they struggle to return to their previous heights. Markets have not responded positively to economic indicators that point towards rate cuts, and those market indicators which favor riskier assets.
In addition to this, the uncertainty that surrounds events like the listing of Ethereum ETF has contributed to market weakness. Rate cuts are on the way and with the dollar’s continued strength, it is likely that the next few weeks will be key in determining how the market moves.
Bitcoin traded at $65,280 when I wrote this, down 2% over the last 24 hours, and a whopping 5% within the previous seven days.
Chart from TradingView.com, image from DALLE
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Source: www.newsbtc.com