Bitcoin plunges amid uncertainty before release of new inflation data

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As an experienced financial analyst, I’ve seen my fair share of market volatility and economic uncertainty. The upcoming Federal Reserve FOMC meeting and the release of inflation data have created a sense of unease in the markets, with risk assets such as Bitcoin taking a hit.

As an analyst, I’m closely monitoring the upcoming Federal Reserve FOMC meeting on Tuesday and Wednesday. With inflation data set to be unveiled during this period, there’s a sense of uncertainty among markets regarding the Fed’s future predictions and actions. Consequently, risk assets like Bitcoin have started to experience a downturn in anticipation of potential interest rate adjustments or other policy announcements that could impact their value.

Confusing jobs data

The economic situation in the United States remains unclear despite conflicting jobs data from recent reports. While some sources indicate that non-farm payroll jobs increased by an estimated 270,000 in May, other data from the Household Survey suggests a decrease of approximately 408,000 jobs.

Another important consideration is that optimistic numbers are frequently re-examined and reduced in later weeks. This could give rise to suspicions that they were artificially inflated to begin with, obscuring the true state of affairs.

FOMC – rates to stay unchanged … for now

As we approach this week’s Federal Open Market Committee (FOMC) meeting, it’s worth noting that both the Canadian and European central banks reduced their benchmark interest rates by 0.25 percentage points last week. However, this development is unlikely to influence the Fed’s decision regarding interest rates. The financial markets are currently predicting a nearly certain outcome of no change in rates.

In simpler terms, when it comes to investments like Bitcoin that carry risks, it’s unlikely that interest rates will remain high for an extended period. This isn’t ideal because a robust bull market requires a consistent influx of funds.

Despite the heavy debt burden, there’s still hope. Eventually, the Federal Reserve may need to reduce interest rates. If current economic conditions continue, it might even become necessary to create more currency to meet debt payments. However, this scenario could potentially unfold toward the end of the year.

Bitcoin is rejected. Can support hold?

Currently, Bitcoin has utilized the doubt surrounding its price movement to break away from the peak of its bull flag. A supportive level lies at approximately $67,000, and it’s possible that the price may pause and rebound there.

Weekly close will be critical

In the grand scheme of a week’s time, the $67,000 mark emerges as a robust support level. Nonetheless, should it fail to sustain this level, the $63,000 threshold lies in wait below. Additionally, an upward trendline might serve as a cushion, preventing any significant price drop and potentially keeping the price afloat around $64,000.

In a more pessimistic outlook, the weekly stochastic RSI is signaling a potential reversal with a upcoming crossover. The significance of this move will depend on the closing price of the week.

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2024-06-11 13:14