Bitcoin (BTC), the world’s most established and valuable cryptocurrency, is experiencing pressure as its price hovers around $65,100, reaching an intraday low of $64,700. The selling pressure has intensified as cryptocurrency hedge funds have reduced their Bitcoin holdings to the lowest levels since October 2020.
This downward trend is not limited to Bitcoin; major altcoins such as Ethereum (ETH), Dogecoin (DOGE), Ripple (XRP), Solana (SOL), and Litecoin (LTC) have also seen declines. The Market Fear & Greed Index stands at a neutral 52, reflecting the uncertainty prevailing in the market. This uncertainty is partly fueled by the Federal Reserve’s revised projection of only one interest rate cut this year instead of the initially expected three, further affecting Bitcoin’s performance.
Federal Reserve Policy Uncertainty and Its Impact on Bitcoin
The strengthening of the US dollar amid the Federal Reserve’s uncertain interest rate policy has confined Bitcoin to a narrow trading range. Initially, the Fed had anticipated three rate cuts this year but has now scaled back to just one. This shift has resulted in higher US Treasury bond yields and a stronger dollar, which impacts Bitcoin’s price dynamics.
Additionally, recent US economic data has been underwhelming. Retail Sales in May increased by only 0.1% month-over-month, falling short of the expected 0.3%, while Core Retail Sales declined by 0.1%. Consumer and producer prices also showed weak growth, with consumer prices rising just 0.1% in May and producer prices remaining unchanged. These indicators suggest sluggish economic activity and have led to mixed expectations regarding future Fed monetary policy, creating an ambiguous outlook for Bitcoin.
Upcoming Economic Data
Key upcoming economic events include:
- Unemployment Claims: Forecast at 235K, down from the previous 242K.
- Building Permits: Forecast at 1.45 million, slightly up from the previous 1.44 million.
- Philly Fed Manufacturing Index: Forecast at 4.8, up from the previous 4.5.
These data points are closely watched by traders for potential market direction.
Hedge Funds’ Withdrawal from Bitcoin
A significant factor contributing to Bitcoin’s dip below $65,000 is the reduction in cryptocurrency hedge funds’ Bitcoin holdings. Over the past 20 trading days, these funds have decreased their exposure to Bitcoin to a beta value of 0.37, the lowest since October 2020. This reduced exposure means hedge funds are now less impacted by Bitcoin’s price movements, explaining the recent steep price decline.
Typically, a beta value of one indicates a strong correlation between hedge funds’ investments and Bitcoin’s price changes. However, a beta of 0.37 reflects a cautious stance, possibly due to anticipated volatility, changing investment strategies, macroeconomic conditions, or regulatory uncertainties.
Bitcoin Price Technical Analysis and Prediction
Bitcoin (BTC/USD) is currently trading at $65,100, a slight increase of 0.64%. On the 4-hour chart, the pivot point is identified at $65,700, which is crucial for determining the next price movement. The closing of candles below the pivot point of $65,500 suggests a bearish outlook for Bitcoin.
Immediate resistance levels are at $66,800, $67,800, and $68,500. On the downside, support levels are noted at $64,150, $63,200, and $62,300. The Relative Strength Index (RSI) is at 47, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) stands at $65,600, aligning with the downward channel resistance near $65,500, which limits Bitcoin’s upward movement.
In conclusion, Bitcoin’s outlook remains bearish below the $65,500 level. A break above this level could potentially boost bullish momentum, while continued trading below it may lead to a further downtrend.
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