(Kitco News) – The prospect of the Federal Reserve cutting interest rates as soon as September buoyed asset prices on Wednesday following two days of dovish testimony from Fed Chair Powell, who testified before the Senate and House.
“Federal Reserve Chair Jerome Powell expressed concerns on Tuesday [and Wednesday] about the risks of maintaining high interest rates for an extended period, which could hinder economic growth,” said analysts at Secure Digital Markets. “The market anticipates the Fed will start reducing rates in September, with a subsequent quarter-point cut likely by year-end. However, FOMC members in their June meeting projected only one rate cut for the remainder of the year.”
Optimism for the first interest rate cut in 2024 has helped elevate stocks to a series of new record highs amid mounting signs that the U.S. economy is slowing. Following Wednesday’s price action, the S&P and Nasdaq have both seen seven straight days of gains and hit new all-time highs in intraday trading.
At the closing bell, the S&P, Dow, and Nasdaq were all well into the green, finishing up 1.02%, 1.09%, and 1.18%, respectively, with the S&P closing above 5,600 for the first time in history. Gold also trended higher, up 0.46% at the time of writing, while crude oil gained 1.22%.
Data provided by TradingView shows that Bitcoin (BTC) showed a similar trend of gains in morning trading, but fell under pressure in the afternoon amid ongoing sales by the German government, falling back below $58,000.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $57,352, a decrease of 0.93% on the 24-hour chart.
Bull vs. bear debate
“Bitcoin is striving to rebound amidst persistent short selling after each rally,” said analysts at Secure Digital Markets. “The key level to watch is $60,500, a breach of which would signify a return to bullish territory.”
“Earlier today, the German Federal Criminal Police Office transferred 10,853 BTC, valued at $637 million, to exchanges and market makers,” they noted. “This is part of their ongoing strategy to liquidate BTC seized from a privacy website. They currently hold 13,360 BTC worth $785 million, accounting for 26.8% of the Bitcoin initially confiscated from Movie2k.”
The analysts added that “since the state commenced selling BTC in mid-June, they have offloaded 30,997 BTC, significantly impacting the crypto market. Bitcoin has depreciated over 15% in the past month, with a recent low of $53,500 last week.”
But there is also some positive news to report as inflows into U.S.-listed spot Bitcoin exchange-traded funds (ETFs) have picked up, with $654.3 million flowing into these products in the three trading days since the Fourth of July holiday.
While inflows have been less consistent over the past several months following their record-setting start, overall, demand remains healthy, lulls are to be expected, and the positive days indicate that the future looks bright.
“More $$$ went into [BlackRock’s] IBIT *just today* than the *total assets* in nearly 90% of all 300+ ETFs that have launched this yr,” Nate Geraci, president of the ETF Store, tweeted on Tuesday. “Most ETF issuers would kill for a $121mil inflow day. Of course, IBIT has taken in $18*bil* in 6mos.”
“Exactly, a 'pretty good' day for $IBIT (like yesterday's +$121m) is more than the majority of ETFs launched this year will have in TOTAL AUM at the end of the year,” replied Eric Balchunas, senior ETF analyst at Bloomberg. “That's how looney tunes these numbers are and why skeptics tend to sound like Flat Earthers.”
“Just for kicks I ran the numbers and last year there were about 500 ETFs launched,” Balchunas said in a follow-up tweet. “We're halfway through 2024 and 76% of those are still under $121m in assets. Raising $100m total in the ETF Terrordome is HARD for a newbie. Yet $IBIT has taken in over $100m in a day 60(!) times since launching.”
On the Bitcoin price front, market analyst Rekt Capital noted that BTC “Needs to reclaim the $60600 Range Low as support to return to the Re-Accumulation Range it broke down from last week.”
While it briefly rallied above $59,000 in early trading on Wednesday, the subsequent pullback below $58,000 indicates that “Bitcoin is not ready to break the Downtrend just yet,” Rekt Capital said.
Taking the bullish outlook was market analyst Moustache, who noted that Bitcoin is about to experience a crossover of the 100-day moving average and 200-day moving average for the first time in its history.
#Bitcoin$BTC is about to make the first bullish cross of the MA100/MA200 in it's entire history.??
Moreover, it is not unusual for Bitcoin to start it's real bull market some time after the halving.
It fits together perfectly tbh. pic.twitter.com/I2mxNlbUiI— ???????ⓗ? ? (@el_crypto_prof) July 10, 2024
Crypto Chase predicted a more bearish future, anticipating a brief spike above $60,000 that will actually be a bull trap and a prime opportunity to open a short position.
$BTC
I'm starting to piece together how I'd like to see price move and how I'd trade it.
A deviation into the 60K's to convince majority that bottom is in (perhaps start half my short here), lose the level then go full size, TP below 50K, then bid/pray that the bull isn't over. pic.twitter.com/rocpqOrKOz— Crypto Chase (@Crypto_Chase) July 10, 2024
And market analyst Castillo Trading has opted for a wait-and-see approach but thinks Bitcoin has gotten off to a good start on its road to recovery.
“Obviously need to see how the rest of this week goes, but definitely a good start on this recovery for the weekly,” Castillo Trading tweeted. “You can't really justify a trend breakdown on LTFs, sometimes it takes patience for HTFs to close and paint a more clear picture.
Altcoin market trades mixed
It was a mixed day for the altcoin market with a slight majority of tokens in the top 200 seeing gains.
Daily cryptocurrency market performance. Source: Coin360
SATS (1000SATS) led the field with a gain of 21.7%, followed by an increase of 17% for Siacoin (SIA), and a gain of 13.9% for Rocket Pool (RPL). Dog [Runes] (DOG) led the losers with a decline of 5.7%, while Galxe (GAL) and Flare (FLR) each fell 4.7%.
The overall cryptocurrency market cap now stands at $2.12 trillion, and Bitcoin’s dominance rate is 53.3%.
