Bitcoin Testing YTD Lows As USD Soars
Hawkish Fed Hurts BTC Sentiment
Bitcoin prices are bouncing back today after a third test of the yearly lows around the $60k-level yesterday. The rampant rise in USD has put significant pressure on Bitcoin over the last week with the futures market shedding around 12% from the mid-June highs. The main driver behind the move has been the hawkish shift in traders’ Fed outlook. On the back of the June FOMC last week, market pricing for a Fed rate hike by year end jumped from below 60% to above 80%. Nine out of eighteen Fed policymakers now see at least one hike this year, up from zero in March, with five seeing at least two hikes. Against this backdrop we’ve seen USD rallying to fresh YTD highs with risk assets correcting accordingly.
Near-Term Views
Looking ahead, risks remain skewed to the downside for Bitcoin. Ongoing uncertainty around the US/Iran peace process means that we are unlikely to see a big risk-positive impact from that situation anytime soon. BTC had rallied initially as news of the deal broke a fortnight ago. However, once it became clear the deal was just an interim agreement to allow for further negotiations, the news lost its bullish impact with the hawkish Fed story since taking centre stage. Looking ahead today, if we see any surprise in core PCE data this could drive fresh burying in USD, turning BTC back down towards the lows.
Technical Views
BTC
For now, BTC is holding above the $60k lows following a fresh test of the level yesterday. If we break below the level, $54k is the deeper bear target to note. However, we are seeing some bearish divergence in momentum studies around current levels suggesting potential for a bounce higher if price can get back above the $62,470 level.
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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.