Powell is 'tight-lipped' about the timing of interest rate cuts, and the crypto market has fallen again

Written by Mary Liu, BitpushNews

On Tuesday, the cryptocurrency market was in a narrow range pattern. Bitcoin was trading near $63,000 in the early morning hours, falling after Powell's comments, hitting a low of $61,730 in the afternoon. It was back up to $61,901 at press time, down nearly 2% in 24 hours.

Altcoins mostly followed Bitcoin’s decline, with more of the top 200 tokens by market cap falling more than rising.

BinaryX (BNX) was a standout, rising 21.4% to trade at $0.9755, Arcblock (ABT) was up 9.8%, and Helium (HNT) was up 6.5%. Pendle (PENDLE) was the biggest loser, down 14.1%, followed by ether.fi (ETHFI) down 10.3% and Aave (AAVE) down 8.3%.

The current overall market value of cryptocurrency is US$2.29 trillion, and Bitcoin’s market share is 53.2%.

In terms of U.S. stocks, at the close, the S&P, Dow Jones, and Nasdaq indexes all rose, rising 0.62%, 0.41%, and 0.84% ​​respectively. The S&P and Nasdaq indexes both closed at record highs.

Fed, employment data drive market

The latest data from the U.S. Bureau of Labor Statistics showed that there were 8.14 million job openings in the United States at the end of May, an increase from 7.92 million in April. Market watchers are now looking ahead to Friday's June jobs report, which they hope will provide more evidence that the labor market is cooling, providing support for a rate cut.

Earlier in the day, Powell said that he was encouraged by the cooling of inflation. Two inflation data in April and May showed that "the Fed is shifting to a deflationary path," but declined to comment on the timing of the first interest rate cut. reiterated the need to see more evidence of progress before cutting rates.

Powell said: "We have made a lot of progress. We just want to understand whether the levels we are seeing truly reflect the actual situation of underlying inflation."

André Dragosch, head of research at ETC Group, commented: "As the U.S. employment data Typically containing lagging indicators, with a few exceptions such as initial jobless claims, we expect U.S. employment data to also deteriorate in the coming months, much like the pattern observed for housing and, more importantly, other leading indicators. There is plenty of evidence that the latest employment data should be treated with caution," he said: "While the latest May non-farm payrolls beat consensus expectations, the 'fine print' of the jobs report shows that U.S. labor market conditions are clearly weakening. ."

Dragosch highlighted some recent "unexpected negative growth" in the labor market and said these "have led to a further repricing of expectations for healthy global growth as market participants increasingly factor in the possibility of a U.S. recession.

Meanwhile, the major U.S. large-cap stock indexes hit all-time highs in June, however this occurred amid weakening market breadth as the bottom 490 stocks generally underperformed the top 10 in the S&P 500. Only large-cap stocks. Thus, polarization in traditional stock markets also signals increased recession and correction risks.

Dragosch said: “The risk for Bitcoin and other crypto-assets is that, first, major large-cap stock indexes such as the S&P 500 still show relatively high correlations with major crypto-assets. Second, global growth expectations continue to be outperformed by Bitcoin. Main macro factors. "

He pointed out that both the S&P 500 Index and Bitcoin are currently dominated by global growth expectations in terms of macro factors, which also explains the high correlation between the two markets, and U.S. Treasury liquidity is " Potential systemic risks that could underpin Bitcoin and crypto-assets,” noting that available liquidity is “worse now than during the 2020 COVID-19 pandemic,” which could mean increased Treasury volatility and the Fed itself may need to intervene in bond markets (i.e. Quantitative Easing), which may also require interest rate cuts like those in 2019.

If the Federal Reserve restarts its easing cycle and the US dollar weakens, this will be good for Bitcoin and crypto assets. Major central banks around the world have already lowered interest rates this year, such as the Bank of Canada, the European Central Bank or the Swiss National Bank. Therefore, the liquidity situation appears to have begun to shift.

Dragosch said: "We believe that the potential recession in the United States and the rising risk of failure in the US Treasury market are the main catalysts for the Fed's eventual change of policy this year. Unless global risk appetite rises again, our basic forecast remains short-term consolidation, That being said, valuations have become more attractive due to the recent correction, and BTC is now close to "fair value"

$65,000. Is the resistance level

Analysts at Blockware Intelligence said in the latest newsletter: "In the short term, we should expect some resistance around the $65,000 level, as short-term market speculators may look to 'profit and losses' Balance' levels to exit positions. Last summer, when BTC lost STH [Short Term Holder] RP support, the price traded sideways for two months before finally breaking out again.

Independent analyst Ali Martinez also mentioned this on the

Martinez said a break above this level could pave the way for Bitcoin to rise to $78,700.

Meanwhile, cryptocurrency company Apollo founder Thomas Fahrer is more optimistic about Bitcoin breaking through $65,000. He declared in an X post on July 2: “The $940 million Bitcoin short position will be liquidated at $65,000. The first rule of Bitcoin is don’t short, money will flow in, and shorts will be punished.”

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