Bitcoin‘s BTC/USD potential breakout remains uncertain, with multiple macroeconomic and market factors influencing its typically flat summer performance.
What Happened: Factors such as the U.S. interest rate policy, lower inflation and the election calendar could mitigate the downside pressures from the $1 billion in token unlocks expected in August, according to a 10x Research report.
The report emphasizes that while a breakout is possible, Bitcoin will likely require “macro help” in the form of projected Federal Reserve rate cuts or further decreases in inflation.
Key upcoming events, including the Federal Open Market Committee (FOMC) meeting on July 31 and the U.S. Consumer Price Index (CPI) report on Aug. 14, will be critical in determining whether Bitcoin remains within its current trading range or breaks out.
Bitcoin has been in a well-defined downtrend since early March, with the upper trend line being tested more frequently than the downtrend line.
“We expect a breakout is more likely than a breakdown as the upside pressure appears larger,” the report states. A close above $69,000 could signal an acceleration in Bitcoin’s price.
Bitcoin’s dominance in the crypto market has increased to 55.5%, the highest level since April 2021.
This rise in dominance is partly due to a notable shift from Ethereum to Bitcoin following the launch of the Ethereum ETF.
The report notes that Bitcoin ETFs raised $500 million last week, while Ethereum ETFs saw a net outflow of $341 million, and Grayscale's converted ETH product experienced $1.5 billion in outflows.
Economic factors also play a significant role. The U.S. GDP growth was strong at 2.8%, but one percent of this growth was due to inventory building, overstating the economy’s strength.
Also Read: Key Bitcoin Indicators Reveal Whether This Rally Is When $75K Breaks
Why It Matters: On July 31, Fed officials are likely to signal the possibility of an interest rate cut at their next meeting in September, given the lower inflation, cooling labor market, and the negative impact of restrictive interest rates.
“Cutting rates would keep the labor market in a sweet spot and ensure the soft landing thesis,” the report explains.
Historically, the Fed has waited 5-10 months between the last rate increase and the first cut, with the current pause of 12 months being one of the longest.
The 2-year treasury yield’s decline to 4.38% indicates that current interest rates are too high relative to market pricing and inflation. An indication of a rate cut on July 31 could push Bitcoin back above $70,000.
Despite low trading volumes over the weekend and bullish claims from presidential candidates, including Robert Kennedy's proposal to buy 4 million BTC as a strategic reserve, the market remained stable.
The report highlights that “understanding these little details is essential in judging how much political support Bitcoin might have.”
Political support, even if verbal, is seen as a positive sign for the crypto industry.
This support could encourage more pension funds to buy Bitcoin, potentially acting as a catalyst for price surges.
The FOMC meeting on July 31 could be pivotal for Bitcoin to surge past $70,000, given its growing dominance and the challenges faced by altcoins.
What’s Next: For further insights into the evolving digital asset landscape, the upcoming Benzinga Future of Digital Assets event on Nov. 19 will be an essential forum for industry leaders and enthusiasts to discuss these trends and their implications.
Read Next:
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
