Markets
Bitcoin Falls Below $68K as Interest Rate Fears Rise, Ether Soars on ETF Hopes
(Kitco News) –Bitcoin (Bitcoin) and the broader crypto market trended lower in early trading Thursday after the latest unemployment claims report came in below expectations.
The US economy registered 215,000 new unemployment insurance claims, falling below the 220,000 expected and the 222,0000 from the previous week.
While the number of people losing their jobs is considered a good thing by many, in the eyes of investors, it is a sign that the economy has become stronger, which lessens the chances of an interest rate cut coming soon.
Adding to the concern of “higher interest rates over longer periods” was the release on Wednesday of the minutes of the most recent Federal Open Market Committee (FOMC) meeting; Several Fed officials indicated they were ready to keep rates high for as long as necessary to reduce inflation, with some even signaling a willingness to raise rates.
Both the DXY and 10-year US Treasury yields spiked on Thursday due to the threat of interest rate hikes, which pressured every financial market from cryptocurrencies to gold and silver.
“Bitcoin retreated more than 3% towards an intraday support level of 67,700, as predicted,” said analysts at Secure Digital Markets. “If support around 67,000 does not hold, we could see a decline to 65,000, which aligns with the 50-day moving average.”
BTC/USD Chart by TradingView
But behind the scenes, the outlook for BTC from an exchange-traded fund (ETF) perspective continues to improve as US ETF holdings hit a new record of over 850,000 BTC in custody, surpassing the all-time high previous 845,000 BTC from early April. ,” analysts said. “Just yesterday, the market saw another inflow totaling $154 million.”
The main story catching the attention of crypto watchers is the Ethereum spot (ETH) ETFs, with industry experts now expecting imminent approval from the Securities and Exchange Commission (SEC), after most analysts gave the changes less than 25% approval on Monday.
“The potential approval of an Ether spot ETF would be groundbreaking as it would mark the first non-bitcoin digital asset to be classified as a commodity,” said Secure Digital Markets. “This raises the possibility that Solana will follow a similar path. While ETH spot ETF 19b-4 filings will likely receive approval this week, S-1 filings are not expected to go into effect for several weeks or months, indicating that there are no ETH spot vehicles until this summer.”
As a result of the enthusiasm and focus on Ether, “ETH has outperformed BTC by 5% in the last 24 hours,” they added.
EthereumBTC Chart by TradingView
Although cryptocurrency prices are struggling in the face of growing economic headwinds, the industry has seen a number of positive developments, the most recent being the approval of the Financial Innovation and Technology Law for the 21st Century (FIT21) in the US House of Representatives.
“The crypto industry achieved its most significant political victory in the US on Wednesday when the House of Representatives approved a sweeping bill to regulate digital asset markets with 279 votes to 136, gaining bipartisan support,” said Secure Digital Markets. “FIT21 marks the first major crypto bill to pass either chamber of Congress. The bill now heads to the U.S. Senate, where its future remains uncertain due to the lack of a counterpart bill.”
As for the stock market, “stock futures rose on Thursday as Wall Street digested the latest quarterly results from market leader Nvidia,” analysts noted. “Nvidia shares soared 6% in extended trading, surpassing $1,000 for the first time, reflecting strong demand for AI, as its revenue more than tripled in the fiscal first quarter, with its data center business growing more than 400% year after year.”
But the positive developments for Nvidia were overshadowed by comments from JPMorgan Chase Chairman and CEO Jamie Dimon, who warned that a “hard landing” for the US economy cannot be ruled out.
“He told CNBC that the worst outcome could be a ‘stagflation’ scenario, characterized by rising inflation and slowing growth amid high unemployment,” the analyst said. “Dimon also noted that interest rates could still rise ‘a little’.”
At the time of writing, Bitcoin is trading at $67,960, down 3.5% on the 24-hour chart. The S&P and Nasdaq rose 0.27% and 0.85%, respectively, while the Dow fell 0.64%.
Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. This is not a request to carry out any exchange of goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article accept no liability for loss and/or damage arising from the use of this publication.