The United States Consumer Price Index (CPI) rose by 3% year-over-year in June, slightly below the market consensus of 3.1%. Analysts claim that this CPI release was bullish for Bitcoin, but traders are questioning why its price remains below $58,000. Three factors could possibly explain investors’ lack of enthusiasm.
Source: Daan Crypto
According to trader, YouTuber and analyst Daan Crypto, Bitcoin’s (BTC) weakness can be attributed to scalpers and market makers trying to liquidate leveraged longs. However, the trend favors “continuation higher,” meaning BTC should bounce back to $60,000 in the near term. Essentially, if the US central bank cuts interest rates, incentives for fixed-income investments are reduced, and some of this money will seek higher returns elsewhere.
Stocks and gold rallied while Bitcoin price stagnated
Chris Larkin, managing director of trading and investing at E-Trade, told CNBC that the Federal Reserve is “one step closer to a September rate cut,” especially after real average hourly earnings for workers slowed 3.9% from the prior year, according to a Bureau of Labor Statistics report. Additionally, the labor force participation rate slightly increased to 62.6% in June from 62.5% in May. According to CNN, slowing wages is a strong incentive for the Fed to begin cutting interest rates.
According to the CME Group’s FedWatch tracker of interest rate futures contracts, traders are now pricing 47% odds of two interest rate cuts in 2024, up from 24% the prior week. Furthermore, Yahoo Finance stated that Fed Chair Jerome Powell is paying closer attention to the employment rate, adding that the central bank “is increasingly aware of the risks posed by a cooling labor market.”
Despite data pointing to higher odds of rate cuts, with consensus surpassing 90% odds of at least one 0.25% rate cut by September, Bitcoin’s price remains pegged below $60,000. Meanwhile, the S&P 500 stock market index is 0.5% below its all-time high, and gold, the market’s preferred store of value, is trading 1.2% below its $2,450 record high from May 2024. Even the Russell 2000 small cap index, which…
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