What to expect from Bitcoin this week

Specialists RBC Crypto analyzed the market situation and assessed the prospects for the Bitcoin exchange rate movement over the next seven days.

“The medium-term trend remains bullish”

Financial analyst BitRiver Vladislav Antonov

The Bitcoin market has shown high volatility over the past week, trading in a price range of $58,402 to $63,369. By the end of the week, the BTC/USDt pair is trading down 3.54%. The week started with a sharp decline in BTC, when on June 24, the price fell below the psychological level of $60,000, reaching a minimum of $58,402.

The decline was caused by a number of factors, including the announcement of the Mt. Gox said it would begin paying creditors in July 2024, raising fears of a possible Bitcoin dump on the market. In addition, there was a steady outflow of funds from Bitcoin ETFs, a reduction in the reserves of Bitcoin miners, and the transfer of a large amount of Bitcoin by the German authorities to cryptocurrency exchanges.

Since June 25, the market attempted to recover, rising to the level of $62,487, but was unable to maintain its gained positions due to the strengthening of the US dollar and low buyer activity. Buyers refused to overcome the key resistance level at $62,500. As a result, Bitcoin remained under pressure, stabilizing at $61,500.

On June 28, Bitcoin fell by 2.07%, to $60,427. Before the opening of the American session, the BTC/USDt pair was trading at $61,800, after which it returned to the level of $60,063. Buyers once again failed to develop an upward movement in the direction of $62,500 and retreated after the publication of statistics and a decline in stock indices.

The dollar showed a slight decline after rising earlier in the period. This move was partly offset by the release of May PCE data, which indicated a slowdown in inflation in the United States.

It is worth noting that the dollar continues to find support from US Treasury yields. May Personal Consumption Expenditures (PCE) data showed headline inflation fell to 2.6% year-on-year, down from the previous rate of 2.7%. Core PCE, which excludes volatile food and energy prices, also fell to 2.6% from the previous 2.8% in April.

High rates on 2-, 5- and 10-year U.S. Treasury bonds (4.71%, 4.32% and 4.33%, respectively) provide resilience for the dollar. As a result, the probability of a Fed rate cut in September has increased slightly to 66%, according to CME’s Fedwatch tool, compared to the previous expectation of 64%. Market expectations are now focused on June labor market data. The U.S. economy remains resilient, and even small signals from inflation data are enough to keep the Fed from holding rates for too long. Traders are still holding out hope for two rate cuts, expecting inflation to ease. The Fed’s forecast is for only one rate cut this year.

Bitcoin did not react to the US macroeconomic data, remaining stable in the price range above $60 thousand. It is unknown how much longer it will remain under pressure.

Key developments of the week included increased regulatory pressure on the cryptocurrency market in the US, in particular the problems of Binance.US, which faced license revocations and suspensions in several states. This situation reflects a broader trend of tightening control over the cryptocurrency market by US regulators. Also important was the aggravation of relations between the cryptocurrency industry and US regulators, where the Coinbase exchange openly challenged the SEC and FDIC, demanding greater transparency on regulatory issues.

In the week from July 1 to July 7, we can expect increased volatility due to the busy economic calendar: business activity indices in the manufacturing and services sectors will be released on Monday and Wednesday, US Federal Reserve Chairman Powell will speak on Tuesday, FOMC minutes will be released on Wednesday, and on Friday US labor market report and Fed monetary policy report. ECB President Christine Lagarde and Fed Chair Jerome Powell will speak on a panel at the ECB’s Central Banking Forum and may comment on future monetary policy.

The medium-term trend for Bitcoin remains bullish, but growth has slowed as part of a local downward correction. According to BitRiver estimates, to increase buyer activity, it is necessary to overcome two levels: $62,500 and $64,600. The $60 thousand level is still in danger of breaking through.

“There is also reason for optimism”

Co-founder of the ENCRY Foundation Roman Nekrasov

Last week was a turning point for the cryptocurrency market. The “fear and greed” index dropped to a six-month low of 30 points – this is the fear zone. Having failed to reach new highs after the April halving, Bitcoin found itself under strong pressure from bears, who took advantage of the moment and pushed the price of the cryptocurrency below $60 thousand.

On June 24, the weighted average Bitcoin rate dropped to $59,236, having fallen by more than $4,000 in one day. The reason was the announcement of the start of payments to victims of the bankruptcy of the Mt. crypto exchange. Gox in early July 2024. While payouts of this magnitude typically involve over-the-counter platforms to minimize the impact on Bitcoin’s price, investors have been gripped by fear that some of the refund will end up on crypto exchanges and be offered for sale, potentially exacerbating depressed market sentiment. crypto market.

The rhetoric of the American regulator does not add optimism either. Representatives of the Federal Reserve System once again stated that the key rate will begin to decrease only if the Federal Reserve sees a confident decrease in inflation and its movement towards the target 2%. Currently, consumer price growth, although decelerating, is still above the 3% mark.

Maintaining the key rate at a high level curbs investors’ appetite for risky assets. In the absence of other positive news, trading participants either maintain a moderately neutral position or take a pessimistic view and prefer to reduce their exposure to crypto assets.

The situation is unlikely to change in the coming weeks, but there is reason for optimism. A number of factors can turn the market towards growth in the coming weeks.

First, there is a high chance that the SEC will approve the launch of an Ethereum-based spot ETF in the US next week. According to Reutersthe regulator may give the green light to a new exchange-traded crypto product as early as July 4. This will be a signal to the crypto market about even greater synergy with the world of traditional finance.

ETH ETFs, like Bitcoin spot ETFs in their time, will facilitate the flow of institutional-grade capital into Ethereum, and with it into the growing decentralized finance (DeFi) market. Secondly, investors are waiting with interest for the publication of minutes from the June Fed meeting on the key rate.

A transcript of what was said during the discussion of further US monetary policy will be made public on the evening of July 3. Trading participants hope to see there signals that the regulator is ready to begin reducing the key rate in the fall of 2024. Finally, the results of the debates between the two main candidates for the US presidency have clearly weakened the position of the Democrats, and crypto investors expect that the Republicans coming to power in the White House will have a beneficial effect on crypto industry.

This week, Bitcoin is set to break out of the narrow channel between $58,000 and $61,000, in which it has been trapped for the past week. If pessimistic sentiment prevails, Bitcoin may go lower to $55,000. But if optimism grows, we may see a sharp jump in the cryptocurrency and its consolidation above $64,000.