Bitcoin

Bitcoin plunges amid uncertainty before release of new inflation data

Bitcoin plunges amid uncertainty before release of new inflation data

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The Federal Reserve holds its FOMC meeting Tuesday and Wednesday, when inflation data will be released. Interest rates are expected to stay as is, but market uncertainty as to the Fed’s future predictions and actions is causing risk assets such as Bitcoin to fall in anticipation.

Confusing jobs data

Mixed, and some say confusing recent jobs data, did nothing to clear the muddy economic waters for the US. Supposedly, 270k non-farm payroll jobs were created for the month of May, but at the same time, the Household Survey showed a loss of 408k jobs. 

It also has to be borne in mind that very often the more positive figures are ‘reviewed’ and then revised downwards in subsequent weeks, which might lead some to believe that they are manipulated in the first place in order to put a gloss on a bad situation.

FOMC - rates to stay unchanged … for now

Going into this week’s Federal Open Market Committee (FOMC) meeting, there is the backdrop that both the Canadian and the European central banks cut rates last week by 25 basis points. This likely will not have any impact on the Fed’s interest rate decision, and the market is pricing in an almost 100% certainty that rates will stay unchanged.

That said, where risk assets such as Bitcoin are concerned, the probability that rates stay higher for longer is not conducive to the flow of liquidity needed that will fuel the rest of the bull market.

However, all is not lost. At some point, the Federal Reserve will simply have to cut rates. The debt burden is becoming more than the economy can withstand, and printing more currency in order to pay the debt is almost a foregone conclusion. It just might be that this does not happen until later in the year.

Bitcoin is rejected. Can support hold?

Source: TradingView

For now, Bitcoin has taken advantage of the uncertainty to fully reject from the top of its bull flag. There is a band of support going down to around $67,000, and perhaps the price will stop and bounce from here.

Weekly close will be critical

Source: TradingView

Zooming right out in the weekly time frame it can be seen that the $67,000 support is quite strong. However, if it doesn’t hold, $63,000 is waiting below, and there is also the upward trend line which could hold the price up at $64,000.

On an even more bearish note, the weekly stochastic RSI is posturing a cross back down. This weekly close will be very informative as to if this cross down is confirmed.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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