As someone who closely follows the cryptocurrency market, I find the recent dip in Bitcoin (BTC) prices below $62,000 disconcerting. The data from the U.S. Q1 GDP coming in significantly lower than expected at 1.6% has unsettled markets and increased concerns about stagflation. This unexpectedly weak economic growth adds to the difficulty of taming inflation and makes the prospect of Fed rate cuts further away.
Bitcoin’s price dipped beneath $62,000 during the April 25 opening on Wall Street, causing a ripple effect due to worrying economic data from the US suggesting signs of inflation and stagnant growth – a phenomenon referred to as “stagflation.”
Fed rate cuts edge further away on GDP print
Data from CryptoMoon Markets Pro and TradingView tracked new multi-day lows of $62,785 on Bitstamp.
The stock markets showed signs of unease as the U.S. first quarter Gross Domestic Product (GDP) growth rate was announced to be 1.6%, which was much weaker than anticipated.
Simultaneously, prices increased more than expected, and responses underscored the challenge of curbing inflation before the Federal Reserve could do so.
If the final figure is 1.6%, this marks the end of a six-consecutive quarter streak with growth exceeding 2%. Nevertheless, we haven’t experienced two successive quarters showing contracting GDP since Q2 2022, according to The Kobeissi Letter’s assessment on X (previously known as Twitter).
“Is the economy beginning to weaken?”
Kobeissi remarked on the unexpectedly low GDP figures, which were approximately half of Goldman Sachs’ prediction.
I’ve noticed that when inflation is on the rise but the economy is showing signs of weakness, the Federal Reserve finds itself in a tricky situation. Lowering interest rates could fuel even greater inflation, while increasing them might lead to an economic downturn. This predicament isn’t exactly what one would call a “soft landing.”
On that particular day, markets had begun to doubt the likelihood of the Federal Reserve easing its economic policies sooner than December, as they no longer fully anticipated an interest rate reduction before then.
I recently observed the updated numbers from CME Group’s FedWatch Tool, which indicated a relatively low probability of 6.3% for the Federal Open Market Committee, or FOMC, implementing a rate cut during their upcoming meeting in May.
Bullish BTC price targets persist
Bitcoin mirrored the decline of U.S. equities, specifically tech stocks, losing ground it had gained the previous week following a dip caused by geopolitical tensions that pushed its price below $60,000.
Not everyone, however, was gearing up for losses.
I’ve noticed in a recent update from well-known cryptocurrency trader Crypto Chase that he proposes an potential increase for the BTC/USD pair, reaching as high as $68,000 to mark its peak.
In my opinion, the potential gains from the current job have not yet been fully realized. I’ve already invested in Ethereum at a price of $3100, but I would consider buying Bitcoin with the intention of reaching a target price of around $68,000.
Looking at the bigger picture, just like I mentioned earlier, Crypto Tony predicted that higher prices are on the horizon before a period of price stabilization in the crypto market.
For analyst Caleb Franzen, the present price of $59,530, which is the current reality for short-term holders (STH), serves as a clear boundary.
The price level at which STH entities, specifically those with fewer than 155 coins, previously transacted is referred to as the STH price. This figure has acted consistently as a market support since the conclusion of the 2022 bear market.
“If BTC falls below STHRP, then I’ll get bearish,” Franzen concluded.
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2024-04-25 17:23