Markets
Bitcoin Back Above $62K: Is the Market Heading for a Bull Run or a Rate Hike Reality Check?
(Kitco News) – Volatility persisted in the crypto market on Thursday as the day began with prices in a downtrend, only for the outlook to improve in the afternoon as Bitcoin (Bitcoin) recovered support at $62,000, while some altcoins recorded double-digit spikes.
“Bitcoin has recovered from recent lows this morning and is poised to challenge its previous peak of $65,000,” said analysts at Secure Digital Markets. “Global trading volume, spanning cash and derivatives markets, declined for the first time in seven months, falling 44% to $6.58 trillion. This drop is attributed to increased geopolitical tensions and reduced investments in US-listed spot ETFs, which have cast a shadow over the cryptocurrency market.”
Stocks rose after the latest unemployment claims reading came in at 231,000, an increase of 22,000 from the previous week and the highest level since August.
This shows that the labor market continues to cool, which many took as a positive sign that 2024 could still see one or more interest rate cuts, despite the recent series of Fed officials repeating the possibility that rates interest rates will have to remain higher for longer, citing resilient inflation.
However, Bert Dohmen of Dohmen Capital Research said that the recent sharp increase in the M2 money supply It means the Federal Reserve will not be able to deliver on expected interest rate cuts this year and investors should start preparing for that possibility.
Dohmen suggested that the Fed is “stuck between a rock and a hard place” as it is forced to finance record Treasury deficits while continuing to combat stubbornly high inflation.
“The Fed is being forced to step on the gas to allow it to finance record US Treasury deficits,” he said. “They know this is inflationary, but they have no alternative.”
At market close, the S&P, Dow and Nasdaq ended in the green, up 0.51%, 0.85% and 0.27%, respectively. The DXY is down 0.5% from its daily high amid the turnaround in markets, trading at 105.218 at the time of writing, while the 10-year US Treasury yield is down 142 basis points from its daily high to 4.457%.
Data provided by TradingView shows that Bitcoin recovered from an early morning daily low of $60,623 and rose 3.4% to reach a daily high of $62,663 before pulling back towards support at $62,500.
BTC/USD Chart by TradingView
At the time of writing, BTC is trading at $62,395, up 1.15% on the 24-hour chart.
Sale of miners puts pressure on Bitcoin
The post-halving reduction in Bitcoin’s issuance rate is still making headway in the crypto market as miners struggle to cope with the decline in revenue.
“We are seeing miners overselling Bitcoin now on the open market to help smooth their gains, which, in combination with a pause in global liquidity growth, is weighing on prices,” said Rennick Palley, founding partner at crypto venture capital . company Stratos, in a note to Kitco Crypto.
“Earlier this year, the market expected up to seven rate cuts. Now, only one is expected, which hasn’t happened yet,” noted Palley. “Inflation has started to rise again recently, although we expect it to ease in the second half of the year.”
“While the Fed meeting last week was largely peaceful in light of recent inflation numbers, one thing Powell mentioned was a slowdown in QT, which signals the beginning of the end of restrictive monetary policies,” he added. “But I think that hasn’t really started to flow into the market yet.”
Palley suggested that without other major positive catalysts on the horizon, the next leg of the bull market will likely occur when the Fed finally decides to cut interest rates, although the timing is uncertain.
“As Bitcoin is highly sensitive to liquidity flows, as soon as the money printer turns on again, it will be ready for the Bitcoin rush,” he said. “Again, three months from now, or six months from now, I’m not sure, but given that it’s an election year, I think it’s highly likely that we’ll find ourselves in a much more accommodative liquidity stance from the Fed going forward. coming months. And as a result, Bitcoin will continue to perform well.”
According to market analyst Rekt Capital, the start of the next uptrend may have already begun, as “over the last year and a half, long periods of decline to end a correction of more than -20% have often been the key to a future price reversal.” .”
The fact that “Bitcoin is still simply holding the low range as support following last week’s negative wick” suggests the bottom may be in sight, he added.
And even the crypto bear il Capo of Crypto thinks that Bitcoin may be forming a solid support base at the current level and may soon start trending higher.
“After deviating below the low range, the price bounced, touched resistance and is now returning to an interesting support zone,” he said. tweeted. “This could be forming the first higher low.”
“There is strong demand between $59,000 and $61,000 and indicators look mostly bullish, so a recovery is likely,” he said. “If BTC breaks the $65K resistance, I would look for $68K to $69K as a first target and $74K to $75K as a second target. Bullish invalidation would be a bearish PA in the previous liquidity zone.”
Altcoins start to climb higher
It was a mixed day of trading in the altcoin market, with a slim majority of tokens in the top 200 recording gains.
Daily cryptocurrency market performance. Source: Coin360
A trio of double-digit gainers led the field, with Akash Network (AKT), Livepeer (LPT), and Arweave (AR) seeing increases of 17.4%, 15.3%, and 11.9%, respectively. Render (RNDR) and Toncoin (TON) also posted 11% gains. FTX Token (FTT) was the biggest loser, falling 7%, while Tellor (TRB) lost 5.4% and GuildFi (GF) fell 4.2%.
The total cryptocurrency market value is now $2.31 trillion and Bitcoin’s dominance rate is 53.3%.
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