Bitcoin Steadies Near $110K as Traders Await Inflation Data, Fed Signals
Bitcoin holds steady above $110K as traders anticipate U.S. inflation data. Analysts expect core CPI to rise 0.3%, with a 61% chance for a Fed rate cut in September. Institutional interest remains strong, with forecasts for Bitcoin to reach up to $200K by year-end, despite some risks in the market.
Bitcoin maintained its position just above $110,000 on Tuesday, buoyed by ongoing institutional investments and a cautious energy from traders waiting for critical U.S. inflation data. The cryptocurrency was last pegged at $109,900, briefly touching a high of $110,237 during the session. This reflects a 4.2% increase over the past week, keeping it in striking distance from its all-time high of $111,814 set on May 22, according to data from CoinGecko.
Investors are particularly attentive as they await the release of May’s Consumer Price Index at 8:30 a.m. ET on Wednesday. Experts expect an increase of 0.3% in core CPI from April and a headline CPI rise of 0.2% month-over-month and 2.4% year-over-year, as noted by MarketWatch. Additionally, producer price figures are set to come out on Thursday, adding to the growing anticipation that could sway the Federal Reserve’s future interest rate decisions.
In the current market environment, some analysts foresee that persistent inflation could hinder the anticipated rate cuts, thus putting pressure on risk assets. However, Fed funds futures are indicating that market sentiments lean towards a potential rate reduction in September, with a 61% probability being reflected, as detailed by CME’s FedWatch Tool.
Rachael Lucas, a crypto analyst at BTC Markets, remarked, “The current rally is less speculative and more structurally driven than in past cycles.” This essentially means the market is supported by robust factors including institutional investments, exchange-traded funds (ETFs), and large corporate purchases. Lucas highlighted a substantial $54.5 million leveraged long position that activated upside momentum, while indicating that solid support is holding around $105,500.
On the corporate front, Strategy, formerly known as MicroStrategy, has accumulated 582,995 BTC, further emphasizing institutional interest. Meanwhile, Japan’s Metaplanet is planning a hefty $5.4 billion fundraising endeavor to increase its Bitcoin reserves, and The Blockchain Group aims for a $342 million raise, showcasing strong demand even amid market uncertainties.
The ETF landscape also appears to be thriving. BlackRock’s iShares Bitcoin Trust has amassed $70 billion in assets, signaling confidence in the market. Moreover, Ethereum ETFs have experienced 15 consecutive days of inflows, totaling $837.5 million, according to CoinGlass data.
On a broader scale, macroeconomic indicators seem to support a favorable environment for cryptocurrencies as U.S.-China trade talks continue, the U.K. lifts its crypto ETF ban, and Hong Kong pushes ahead with Central Bank Digital Currency (CBDC) pilots alongside Chainlink.
Some experts are theorizing that this current cycle could evolve into a ‘supercycle’, characterized by lesser volatility and greater institutional backing. Yet, Lucas cautions that risks remain, with potential regulatory setbacks, liquidity crises, or shifts toward alternative digital assets such as Ethereum or Solana possibly dampening upside growth. Furthermore, she warned that increased profit-taking or a slower approach from the Federal Reserve regarding rate cuts could rekindle interest in government bonds, presenting a challenge to cryptocurrency valuations.
Despite these cautious points, projections from firms like Bitwise and VanEck assert price targets between $180,000 to $200,000 by the end of the year, contingent upon persistent inflows and a favorable macroeconomic landscape.
In summary, Bitcoin appears to be stabilizing above $110,000, primarily due to institutional support while market participants eagerly await inflation data which could influence the Federal Reserve’s monetary policy. Analysts remain cautiously optimistic; they note the current market structure is different from prior cycles. With various institutional players backing the crypto, the outlook suggests a potential surge to higher price levels, although risks should not be overlooked.
Original Source: decrypt.co
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