(Kitco News) – Asset prices climbed higher in trading on Wednesday amid rising optimism regarding the possibility of an interest rate cut coming in September amid signs of slowing labor demand and a cooling economy.
“Weak private labor market data has fostered investor optimism regarding potential Federal Reserve intervention to lower interest rates later in the year,” said analysts at Secure Digital Markets. “Private payroll data from ADP revealed a slowdown in hiring to 152,000 last month, below the anticipated 173,000.”
“This data signals ongoing weakness in the labor market, potentially providing the Federal Reserve with the necessary impetus for rate adjustments,” they said. “The resulting slide in the benchmark 10-year yield adds to the tepid performance observed thus far in June, with anticipation mounting for Friday's pivotal May jobs report.”
While cracks in the labor market could help motivate the Fed to begin lowering the cost of borrowing, some analysts, including DoubleLine Capital CEO Jeffrey Gundlach, have warned that they are also a sign that the economy could be headed for a recession rather than a soft landing.
The data has boosted the odds of a rate cut in the eyes of investors, with the CME FedWatch tool showing that roughly 65% of traders now expect the Fed to reduce the benchmark rate at their September meeting, compared with less than 50% a week ago.
Wednesday also saw Nvidia (NVDA) stock climb as much as 5% to hit a new record high and surpass a market cap of $3 trillion, becoming the third stock to achieve the milestone behind Apple (AAPL) and Microsoft (MSFT).
Data provided by TradingView shows that Bitcoin (BTC) climbed from a low of $70,183 to hit a high of $71,814 in the afternoon, an intraday swing of 2.35%.
BTC/USD Chart by TradingView
King Crypto has since pulled back to support near $71,000, and, at the time of writing, trades at $71,281, an increase of 1.35% on the 24-hour chart. The S&P and Nasdaq closed at record highs, gaining 1.18% and 1.96% respectively, while the Dow climbed 0.25%.
ETF inflows boost Bitcoin, new ATH ahead
Bitcoin “has shown green for the fifth consecutive day, marking its lengthiest such streak since March,” said analysts at Secure Digital Markets. “This surge in activity follows the recent approval of U.S. spot ETH ETF filings and amidst a positive sentiment surrounding cryptocurrencies spurred by the ongoing U.S. presidential campaign.”
“In the realm of U.S. BTC ETFs, Tuesday saw a substantial influx of $886.6 million, with Fidelity leading the charge with $378.7 million,” they added. “This surge in inflows marked the most substantial daily increase since March and the second-highest overall since the launch of BTC ETFs in January.”
The spike in inflows “came five months after the ETFs launched, which means that all those bearish predictions on inflows happening only right after launch, as there would be no sustained interest from TradFi, have been proven laughably wrong,” said market analyst Bloodgood. “Long story short: the institutions are here, and they want your Bitcoin. When the Ether ETFs start trading—probably in a few weeks—they might start gobbling up ETH too.”
According to insights from K33 research, “ETH spot ETFs could potentially draw in $4 billion in inflows within the first five months, potentially leading to a supply shock. This scenario could prompt ETH to outperform BTC, breaking a two-and-a-half-year downtrend in the ETH-BTC pair.”
ETH/BTC Chart by TradingView
“At the time of writing, Bitcoin is trading around $71k, which puts it in a good position to go for the all-time highs and rip through into price discovery,” Bloodgood said. “Keep in mind that if you want to be completely safe, you will wait for a weekly close and then decide what to do. Two weeks ago, we saw a breakout, only to be followed by a weekly candle close back below the breakout zone.”
“On the daily timeframe, we can see a clean break above the aforementioned level as well as an increase in volume—a textbook breakout,” he added. “There is a daily resistance at $71,480, which was already tested today, and if broken above, I am confident we will see the ATH tested this week.”
Altcoins climb higher
Altcoins benefited from Bitcoin’s rally higher as roughly 85% of the tokens in the top 200 recorded gains on Wednesday.
Daily cryptocurrency market performance. Source: Coin360
Stacks (STX) was the market leader, climbing 13.3% to trade at $2.40, followed by Echelon Prime (PRIME), which gained 10.45%, and GMX (GMX), which increased by 10.3%. Notcoin (NOT) was the biggest loser, falling 10.4%, while Core (CORE) lost 4.6%, and JasmyCoin (JASMY) declined by 4.2%.
The overall cryptocurrency market cap now stands at $2.64 trillion, and Bitcoin’s dominance rate is 53.1%.
