Heavy Risks For Bitcoin This Week
BTC At Lows
Bitcoin bulls remain in a precarious state on Tuesday with the futures market remaining anchored to the YTD lows following the reversal lower from mid-June highs. The hawkish shift in trader’s Fed outlook on the back of the June FOMC has weighed heavily on crypto assets. The updated dot-plot forecast from the Fed saw nine of the eighteen members projecting at least one hike this year, up from zero at the last update in March. Additionally, five members forecast there to be at least two hikes this year, further reflecting the hawkish shift in sentiment. On the back of that meeting, market pricing for a hike by year end jumped from below 60% to around 85%.
Fed Rate Hike Expectations
Looking ahead this week, there is strong two-way risk for bitcoin. In recent days, however, we’ve seen a slight cooling of those rate hike expectations mainly linked to the sharp drop we’ve seen in oil prices and the implication of that for the inflation outlook. Traders are questioning whether there will still be pressure on the Fed to hike rates in Q3/Q4 if il prices continue to fall, particularly if the US and Iran do agree a proper peace deal ending the war. On Thursday, the latest US NFP data will be make or break near-term for BTC. If the data surprises to the upside, this should see rate hike expectations rise again, sending USD higher and BTC down through lows. Alternatively, if data undershoots forecasts, this should see traders cooling their rate hike expectations, leading USD lower and BTC higher.
Technical Views
BTC
The market continues to hg the $60k level lows with several candles recently testing below that level. With momentum studies bearish, risks are pointed firmly lower with $53k the next support to watch if we do fall this week. Topside, bulls need to get back above $65,380 to alleviate near-term downside risks.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.