Bitcoin rally hinges on rate cut, Bitfinex exec says

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As a researcher with a background in macroeconomics and experience in the cryptocurrency market, I believe that the U.S. Federal Reserve’s decision to maintain current interest rates could continue to impact Bitcoin negatively in the short term. The ongoing uncertainty surrounding inflation and economic data justifies the Fed’s cautious approach, which may keep demand for risk assets like Bitcoin low.

As an analyst, I would interpret it this way: Macroeconomic instability in the United States pushed Bitcoin down to its lowest point in two months. However, the signs of abating inflation indicate that monetary policy could strengthen investor confidence once again.

As a crypto investor, I’ve noticed that Bitcoin’s price dipped below the $57,000 mark shortly after the U.S. Federal Reserve announced its decision to maintain the current interest rates during their meeting. This confirmation came despite economic data that could potentially warrant more accommodative monetary policies.

In a recent report, Jag Kooner, the Head of Derivatives at Bitfinex, expressed that the Federal Reserve’s choice to postpone any decision on reducing interest rates indicates a measured optimism towards the possibility of decreasing inflation trends. However, this optimism does not yet reach the level required for an immediate rate reduction.

Last month, as predicted by Lucy Gazmararian, the primary cryptocurrency exhibited a significant correlation at the macro level, resulting in a 5% decline within a 24-hour period. This downward trend can be attributed to rising interest rates, which typically dampen investor appetite for riskier assets such as cryptocurrencies, potentially causing the market’s recent fluctuations.

The central bank’s determination to maintain a 2% inflation rate has caused Bitcoin to fluctuate between $56,800 and $70,000 following its strong beginning in the new year. The excitement from the approval of a spot Bitcoin ETF and the anticipation before the halving event have subsided, but Kooner believes that forthcoming information will provide more clarity about the future trend during the next few months.

How tomorrow’s NFP report could impact Bitcoin and BTC ETFs

Based on Kooner’s perspective, the upcoming Non-Farm Payrolls (NFP) report due this Friday may heighten anticipation for potential future interest rate reductions or exert additional bearish influence on Bitcoin.

As a market analyst, I’ve observed that some market players hold the view that economic instability might prompt the Federal Reserve to reduce interest rates in the future. This belief could potentially rekindle Bitcoin’s allure as an inflation hedge, leading investors to allocate funds towards spot Bitcoin Exchange-Traded Funds (ETFs).

As an analyst, I’ve observed a rather disappointing trend in Bitcoin flows and a noticeable absence of “dip-buying” since the halving event. Moreover, I’ve noticed that trading activity on US spot Bitcoin Exchange Traded Funds (ETFs) has slowed down significantly, with a particular decline in trading volumes.

As a crypto investor, I’ve noticed that the flow of investments into US Bitcoin ETFs has remained relatively stable, with neither significant inflows nor outflows. The total net inflows since the launch of these ETFs amounts to a robust $14.7 billion. However, there is a concerning trend in terms of trading volume. The daily trading volume for this group has been decreasing steadily and hasn’t exceeded the $3 billion mark since mid-May.

— James Seyffart (@JSeyff) July 2, 2024

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2024-07-04 22:27