(Kitco News) – Financial markets largely traded sideways on Thursday as investors opted to wait for tomorrow's Personal Consumption Expenditure (PCE) report – the Fed’s preferred inflation gauge – before deciding on their next moves.
While stocks, Bitcoin (BTC), and gold all trended higher during the morning session, only gold was able to hold the majority of its daily gains into the afternoon after the latest jobless claims and GDP reports sent mixed signals to the market.
“Bank stocks were in the spotlight following the Federal Reserve's announcement that the largest U.S. firms can withstand a severe recession scenario,” said analysts at Secure Digital Markets. “Investors are now awaiting the latest inflation data, with May’s personal consumption expenditures price index due on Friday. The hope is that the report will show easing pricing pressures, potentially paving the way for the Federal Reserve to lower interest rates later this year.”
“Traders are also keeping a close eye on the upcoming Biden-Trump presidential debate at 9 PM EST, as its outcome could significantly impact the crypto industry,” they added. “Standard Chartered predicts a record rally in BTC to $150,000 if Trump secures victory.”
At the closing bell, the S&P and Dow both finished up 0.09% while the Nasdaq gained 0.30%.
The recent weakness for Bitcoin has been attributed to several factors, including the announcement that the Mt. Gox Bitcoins would start being distributed to creditors beginning in July.
“Given that creditors are sitting on unrealized gains to the tune of 100x, it’s natural to think that many of them would jump on the opportunity to sell, but there are two reasons why the market impact could be smaller than anticipated,” said market analyst Bloodgood in his latest market update.
"First, Mt.Gox creditors are largely Bitcoin OGs—not exactly the crowd to instadump their coins,” he said. “Second, some of those that needed the money have already sold their claims in the meantime; while the people that bought claims can also sell of course, their cost basis is much higher (especially if they bought the claims more recently).”
“Hence, some of the weakness on BTC recently might have been a result of insiders front running the Mt Gox announcement,” Bloodgood said. “Meanwhile, the climate of peak fear created by this dreaded headline led to an incredible dump on Monday, with about negative $4 billion net delta (market buys minus market sells) across major exchanges.”
“We all know about ‘buy the rumor, sell the news’ when it comes to bullish headlines, but – depending on the details of the reimbursement process – we might see something similar play out in the other direction.”
Another factor weighing on Bitcoin’s price was the transfer of approximately 3,940 Bitcoins held by the U.S. government to Coinbase in preparation for sale.
“Yesterday, Bitcoin retreated to around $60,700 following a significant move by a wallet linked to the U.S. Government, which transferred approximately $240 million in seized BTC to an exchange,” analysts at Secure Digital Markets said. “This action sparked concerns among traders about a potential sell-off. However, BTC is currently testing its Tuesday high, indicating a possible breakout. Our next target on the upside is $65,000, with strong support at $60,200.”
“Bears continue to be strong as Bitcoin dropped below $60k at the beginning of the week,” said Bloodgood. “The level we discussed in the previous issue, as well as in others, has been reached. Now, we can just wait and see what happens. We got a strong bounce from the level, however, if bulls do not follow through on this, we might just end up back below it.”
“Closing below $60k means just one thing for altcoin traders: a painful summer,” he warned. “Otherwise, it’s fun times ahead.”
Addressing the possibility of a further correction lower was crypto strategist Benjamin Cowen, who told his YouTube followers that Bitcoin could return to the $50,000 range on the weekly chart amid a possible “summer lull.”
“You could certainly have a deeper pullback as well, back into the $50,000s. I do think that’s certainly possible,” Cowen said. “We really haven’t had that many large pullbacks. A lot of these pullbacks have actually been relatively muted, especially compared to last cycle. These pullbacks are basically just like 20% pullbacks, essentially all of them.”
“Even this one [in May 2024], it was still only about a 23% pullback,” he added. “So last cycle, after that 2019 top, we ended up getting about a 50% pullback. Obviously, it went further down because of the pandemic later on…Even in the 2016 camp, there were still some larger pullbacks like 30% and 40%.”
That being said, Cowen acknowledged that nothing is certain in crypto, and as the asset class matures lower volatility is to be expected.
“But I think in the same way that we’ve talked about diminishing returns, you’re also likely going to see diminishing volatility, as well as the cycles go on just because it takes exponentially more and more money to move the price,” Cowen concluded.
Data provided by TradingView shows that Bitcoin is now oscillating in a range between $60,500 and $62,500, with bulls and bears evenly matched for strength.
BTC/USD Chart by TradingView
At the time of writing, Bitcoin trades at $61,448, an increase of 1.11% on the 24-hour chart.
Altcoins trend higher
It was an overall positive day in the altcoin market as the majority of tokens in the top 200 recorded gains.
Daily cryptocurrency market performance. Source: Coin360
Mog Coin (MOG) led the field with an increase of 31%, followed by a 16% gain for SATS (1000SATS), and a 15.6% climb for Book of Meme (BOME). A trio of artificial intelligence coins led the losers, with Fetch.AI (FET) falling 13.3%, Ocean Protocol (OCEAN) declining by 11.8%, and SingularityNET (AGIX) losing 11.4%.
The overall cryptocurrency market cap now stands at $2.29 trillion, and Bitcoin’s dominance rate is 53%.
