(Kitco News) – Financial markets suffered a reversal of fortunes as the gains recorded earlier in the week were matched by the losses seen on Thursday, with stocks, crude oil, gold, and Bitcoin (BTC) all trending lower.
The day started positively after the latest jobs data showed that the labor market continues to cool, with the number of continuing applications for unemployment benefits hitting the highest level since November 2021.
“The softening that we have been witnessing in the US labor market so far in 2024 continues,” said Aurelie Barthere, Principal Research Analyst at Nansen.ai, in a note to Kitco Crypto. “The number of unemployed people in the US is up by 1 million from the trough. The levels are not alarming yet but the momentum is for a softer labor market.”
“At the Economic Club on Monday, Fed Chair Powell communicated that the Fed is now more attentive to the risk of unemployment rising too much,” he added. “This means that the Fed can deliver on the 2-3 rate cuts priced by the end of the year by OIS markets. For crypto, low rates can be supportive as long as US growth is softening but the economy is not in recession."
Sentiment in the market took a turn for the worse near midday as concerns related to things like tariffs, political and geopolitical struggles, and other trade risks overshadowed the increased odds of an interest rate cut in September.
At the market close, the S&P, Dow, and Nasdaq were all in the red, down 0.78%, 1.29%, and 0.70%, respectively. Crude oil lost 0.51%, and gold pulled back from its recently established record high, falling 0.49% to trade at $2,447.80 at the time of writing. The DXY gained 0.50% on the day, while the U.S. 10-year Treasury yield increased by 4.1 basis points to 4.2%.
Data provided by TradingView shows that after trading sideways near $65,000 in the early hours on Thursday, Bitcoin dropped to support at $63,500 in the afternoon.
BTC/USD Chart by TradingView
“Bitcoin retraced from the $66,000 mark, just shy of our $67,000 resistance level,” said analysts at Secure Digital Markets. “This pullback is accompanied by a decline in open interest and trading volume, indicating the previous rally's momentum is waning. The pause in Wednesday's rally coincided with a significant sell-off in the equity markets, notably with the Nasdaq dropping 2.7%. Should this market correction continue, it may hinder the crypto rally further. A close below the 50-day moving average around $64,000 could signal a further decline towards $62,000.”
At the time of writing, Bitcoin trades at $63,595, a decrease of 1.52% on the 24-hour chart.
The long-term bullish thesis remains
While markets are currently showing weakness, with Bitcoin struggling to break above resistance at $67,000, most crypto analysts agree that the mid- to long-term outlook remains bullish despite the formation of “lower highs and lower lows.”
While I am impressed by the current bounce in Bitcoin $BTC it should be noted that the sequence of lower highs and lower lows continues despite the halving, despite the ETf, despite the hype pic.twitter.com/V5M6FFaMpJ
— Peter Brandt (@PeterLBrandt) July 17, 2024
According to MN Trading founder Michaël van de Poppe, evidence that the market is near its bottom can be found in the Bitcoin network hashrate, which just saw its biggest decline since the collapse of FTX in 2022.
At the bottom, #Bitcoin miners are capitulating.
The True Hashrate Drawdown at its last low on July 1st was as HEAVY as during the FTX collapse.
This marks a cycle low. Since the Mt. Gox news, the price has rallied 20%.
The next leg is likely to bring Bitcoin to $110K. pic.twitter.com/pCSifNMrgW— Michaël van de Poppe (@CryptoMichNL) July 17, 2024
“Bitcoin is nicely consolidating within the four-month range,” Poppe said in a follow-up post. “As long as it stays above $60K, it's very likely going to continue rallying upwards. Gold has been making a new all-time high, Yields are falling. Just a matter of time until Bitcoin picks up.”
To further strengthen his argument, Poppe highlighted Bitcoin’s Network Value to Transactions (NVT) ratio, which he called “an important indicator for Bitcoin.”
“It hits the lowest, negative number in the past 2.5 years,” he noted. “Worse than the collapse during Luna, or the correction in the Summer of last year, or after the Bitcoin listing. The correction is over, buckle up.”
And market analyst Rekt Capital noted that “Bitcoin rejected from $65000 after upside wicking into it [and] treating it as resistance,” adding that “The clustering continues between $60600-$65000 (green).”
It’s only a “Matter of time before BTC is ready to reclaim $65000 as support to kickstart a new red cluster,” Rekt Capital said.
Altcoins in the red
It was an overall red day for altcoins as 90% of tokens in the top 200 recorded losses.
Daily cryptocurrency market performance. Source: Coin360
Galxe managed to rise above the noise to lead the gainers with an increase of 43.2%, followed by a gain of 17% for Argon (ANT) and an 8.5% increase for Mantle (MNT). Worldcoin (WLD) took the biggest hit, falling 13.4%, while Mog Coin (MOG) lost 11.8%, and Brett (BRETT) declined by 9.5%.
The overall cryptocurrency market cap now stands at $2.33 trillion, and Bitcoin’s dominance rate is 53.8%.
