Over the past few hours, Bitcoin has continued to be under strong selling pressure. This has forced its price to remain below $60,000 and investors have few clues. So far, there is no clear reason to explain this decline in the largest Cryptocurrency.
In this piece, we review some of the possible incidents that led to BTC crashing from the recent $64,000. According to some analysts, the main reason for the pullback is an increase in pessimism about the expected rate cuts in the United States.
Bitcoin remains under pressure awaiting PCE inflation report
The US PCE inflation report for July is due out on Friday. This is the Federal Reserve’s favourite price window for determining monetary policy. It is suspected that inflation will not decline in line with expectations and that would be the main source of pessimism now.
For June, this price index fell to 2.7% and the consensus expects it to fall to 2.6% in July. If this trend continues, it is safe to assume that a rate cut will occur at the next Fed meeting. On the other hand, if the PCE remains unchanged or even rises, the decision on rate cuts could be delayed again.
This is the scenario that some analysts fear and would probably be the cause of the current bad moment of the BTC price. There are other factors that would also be playing negatively, such as the payments of obligations by Celsius.
Meanwhile, the movement of funds by whales to exchanges is also causing tension in the crypto market. As shown by Whale Alert data, the frequency and magnitude of transfers to CEXs seems to be increasing in the last few hours.
Through July, the US annualized GDP stood at 2.85. Source: Fxstreet
Other macroeconomic data to take into consideration
The PCE inflation report is not the only factor that could contribute to negative sentiment in the cryptocurrency market. Other data will be released on Thursday that could either increase or alleviate the pessimism of investors. The fact that Bitcoin continues to be under selling pressure is suggestive that there will be some less than inspiring data.
In any case, this Thursday we will see data on economic growth for the second quarter in the United States. If the GDP of that country shows negative numbers, fears of recession could become stronger. Consequently, that would be the hypothetical main element of selling pressure on BTC and the rest of the altcoins.
On the other hand, last week’s unemployment claims data will also be released. These are other suggestive elements that express the state of the economy. It should be noted that this latest report is much more recent than the PCE and the GDP, which means that its weight will be enormous.
As you can see, the factors that drive BTC’s price are varied and highly influential. So, as things stand right now, it seems that some whales have privileged knowledge about some of these reports before they are published.
Bitcoin price recovers 60K again this Thursday. Source: CoinMarketCap
What to expect from the BTC price?
As mentioned, everything now depends on how investors react to the aforementioned US macro data. If everything turns out to be a false alarm and the data is positive, the BTC price could revive in a matter of hours.
Even if GDP data is up and claims for performance are down, one could say there will be a rebound. If these data remain in favorable numbers, the Fed would be expected to cut interest rates by at least 25 basis points.
If the Fed lowers the rate, this would indicate that a period of better conditions awaits financial markets in 2025. In that sense, the expected soft landing would be a reality and a new cycle of abundant liquidity would be at the door.
The Federal Open Market Committee (FOMC) meeting where that decision will be made will be on September 17 and 18. At the time of writing, the price of BTC has recovered to $60,100 per unit, according to CoinMarketCap. If the currency manages to establish itself above that line, it could be said that there are great possibilities for a recovery rally.
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