(Kitco News) – The cryptocurrency market trended lower on Tuesday as the transfer of 140,000 Bitcoins (BTC) related to the estate of defunct cryptocurrency exchange Mt. Gox spooked crypto investors despite assurances from the trustee overseeing the bankruptcy that they were not selling the tokens.
The ensuing sell-off erased Monday’s rally above $70,000 and saw the top crypto hit a low of $67,190 on Tuesday afternoon before bulls pushed it back above $68,200.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $68,205, a decrease of 1.99% on the 24-hour chart.
Stocks saw a mixed day of trading as investors are now back on inflation watch ahead of this week’s release of the Personal Consumption Expenditures (PCE) price index on Friday – the Federal Reserve’s preferred inflation gauge.
Minneapolis Federal Reserve Bank President Neel Kashkari did little to calm the nerves of investors, telling CNBC during a Tuesday interview that the U.S. central bank should wait for significant progress on inflation before cutting interest rates.
"Many more months of positive inflation data, I think, to give me confidence that it’s appropriate to dial back," Kashkari said when asked about the conditions needed for the Federal Reserve to cut rates once or twice this year. This adds to the host of Fed officials who have recently warned that the data must show real cooling in inflation to trigger a policy shift.
There is some cause for hope, however, as U.S. consumer prices increased less than expected in April, suggesting that inflation resumed its downward trend at the start of the second quarter. Updates on Q1 GDP and consumer confidence this week will help give investors a better idea of what to expect on the interest rate front.
The CME FedWatch Tool shows that the market is predicting only a 46% chance of a rate cut in September, down from 66% last week. The odds of a rate cut in December – after the U.S. Presidential Election – currently stand at 80%.
At the closing bell, the major indices finished mixed, with the Nasdaq gaining 0.59%, the S&P flat and the Dow losing 0.55%.
Opportunity to sell in Q3 before a recession hits
While many in the crypto ecosystem have lamented the sideways trading for the past three months, experienced analysts know that it is par for the course around Bitcoin halvings, and the bull market will eventually resume its uptrend.
“In January I said $110,000 to $115,000 on Bitcoin and I stick to that. I think we’re hours or days away from a big move starting again,” said macro strategist Henrik Zeberg during an interview on the Bloor Street Capital YouTube channel. “We had a big move on [May 20th]. I think that was just the beginning. Now we’ve been consolidating for a few days, and I think we’re going to see a very, very big move coming into mid-June, but an uptrend with consolidations, pullbacks.”
Zeberg gave a timeline of August to October for the major breakout to occur. “It’s more about the levels that I need to see. I need to see up above $105,000 for Bitcoin, $110,000, and then I need to see the S&P around 6,000,” he said. “Then I will start to become more worried. These are the levels. Timeline-wise, Q3.”
The reason for the worry is that Zeberg is predicting an economic recession will occur in the U.S. before the end of 2024.
“My timeline for now is that I see that the recession probably sets in by Q4 this year, could be October, November, [or] December,” he said. “And I think the stock market will top out two months before that. So that means in Q3, potentially October or so, but right now it’s August, September. That is my timeline for that.”
Zeberg further clarified his position, saying, “That is my best estimation based on what I see.”
“There is nothing that tells me that we should go above this,” he said. “We have on various assets we start to see weaknesses come in. We start to see weakness in Europe. We start to see weakness in Asia in the Nikkei, and in the Nifty as well. So I think you’re going to see the top in the stock market in Asia and Europe setting in before you see it in the U.S., and you’re going to see a rotation of capital from Europe, from Asia into the U.S.”
“So that’s why I’m saying I’m not bullish across all markets,” Zeberg concluded. “I’m bullish on the U.S. market at this point. I am bullish on small caps because I also think there’ll be a rotation from large caps into small caps as we get into the final phase of this business cycle.”
Market analyst CrediBULL Crypto’s view aligned with this analysis, saying he sees further consolidation before Bitcoin ultimately moves higher.
“Longs on $BTC looking great here. I would have no qualms if we simply continued pumping from here, but I think something like this makes a lot of sense right now,” he said. “My longs are higher timeframe swings so I will simply hold them and add more if we get the [above] scenario. If we don't, we ride the current longs to 100k+.”
And market analyst Rekt Capital said, “Bitcoin is increasingly showing signs that this recent rebound has fed into the formation of another local top.” He warned that history suggests it will consolidate between $60,000 and $70,000 for the foreseeable future until it breaks out of the “Re-accumulation range” and enters the “Parabolic Phase.”
Altcoins trend lower
Most altcoins in the top 200 recorded losses on Tuesday, but it wasn’t all bad as six tokens managed to record double-digit gains.
Daily cryptocurrency market performance. Source: Coin360
Meme token cat in a dogs world (MEW) led the field with an increase of 24.6%, followed by a 19.4% gain for Celestia (TIA), and a 15.4% increase for ConstitutionDAO (PEOPLE). Echelon Prime (PRIME) was the biggest loser, falling 8%, while Stacks (STX) lost 5.71%, and Arweave (AR) declined by 5.5%.
The overall cryptocurrency market cap now stands at $2.57 trillion, and Bitcoin’s dominance rate is 52.5%.
