The cryptocurrency market is witnessing a major pullback, with Bitcoin leading the way by falling to the $65,000 mark after failing to retest its price. Highest level ever $73,700 was reached in March.
Market expert Michael van de Poppe has highlighted the reasons behind this ongoing bloodbath, highlighting several key factors that have contributed to the current market situation.
The cryptocurrency market is fighting uncertainties
Major event Highlight By Van de Poppe It is last Wednesday's release of the Consumer Price Index (CPI) data, which has a major impact on the Federal Reserve's decision on interest rates.
The data, which was lower than expected, favored risk assets. A lower-than-expected headline CPI of 3.3% (vs. 3.4% exp) and core CPI of 3.4% (vs. 3.5% exp) indicated potential Interest rate cuts Or positive expectations of future interest rate cuts, providing favorable market conditions.
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Another important event was the release of Producer Price Index data, which provides inflation data from the perspective of producers. The data revealed a lower-than-expected regular PPI score of 2.2% (vs. 2.5% expected) and a lower-than-expected core PPI score of 2.3% (vs. 2.4% expected).
in addition to, Monthly data It showed negative numbers, which increased the preference for riskier assets. However, Van de Poppe emphasizes that despite these positive indicators, the cryptocurrency market has continued its downward trend.
According to Van de Poppe, the release of consumer confidence data on Friday also affected the market. Consumer sentiment is a market leader and a measure of market strength or weakness. The data was lower than expected, reaching 65.6 (compared to the expected 72.1).
This data points to a lack of economic strength, which could fuel bullish sentiment for riskier assets and a shift towards native cryptocurrency markets.
However, Federal Reserve Chairman Jerome Powell delivered an unexpectedly hawkish speech. Despite data indicating the need to lower interest rates Deteriorating economic conditionsPowell maintained his hawkish tone and reviewed possible interest rate cuts in 2024.
According to Michael van de Poppe, these forecasts do not bode well for the markets, adding to the current uncertainty and notorious price volatility seen in recent days.
Bitcoin prices continue to struggle as bond yields decline
The analyst also noted that market indicators, such as Treasury yields, declined. 2 years Treasury bond yield It fell to the lowest point in two months, while the 10-year bond yield continued to fall to the lowest point since the beginning of April.
These indicators typically point to favorable conditions for Bitcoin and riskier assets, meaning a greater likelihood of a potential interest rate cut. However, the US dollar continued to strengthen due to interest rate cuts by the European Central Bank.
Van de Poppe believes that this unexpected strength of the dollar, driven by the actions of the European Central Bank, has further complicated the situation Market dynamicsReducing interest rates is usually necessary to achieve economic stability.
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In short, the cryptocurrency market, especially Bitcoin, has fallen significantly as it struggles to regain its previous highs. Despite positive economic data indicating possible interest rate cuts and market indicators favoring risk assets, the market has failed to respond positively.
The ongoing uncertainty surrounding events, such as the listing of the Ethereum ETF, has contributed to the market weakness. With interest rate cuts on the horizon and the dollar continuing to strengthen, the coming weeks are likely to be crucial in determining the market's direction.
At the time of writing, Bitcoin was trading at $65,280, down 2% in the past 24 hours and more than 5% in the past seven days.
Featured image of DALL-E, chart from TradingView.com