Bitcoin confidently held above $20k, however, falling trading volumes brought the moment when an important psychological level would be broken again. This happened not only due to a decrease in buying activity, but also due to a number of fundamental factors for the cryptocurrency. In the current market situation, Bitcoin is completely dependent on macroeconomic events, as well as stock market movements. After a short upward correction, SPX and NDX resumed their downward movement.
Given the correlation between Bitcoin and stock indices, there is every reason to believe that these assets are in for a joint adventure in search of a local market bottom. We are approaching a tipping point as regulators release key financial data. The market remembers how the story about the publication of inflation data in the US ended: an unexpected historical inflation record of 8.6% and the subsequent reaction of all categories of investors, which led to the establishment of a local bottom in the region of $17.7k.
On the eve of the next wave of reporting, the market has several important reasons for optimism. JPMorgan experts said that inflation has reached its peak and will continue to decline. Similar information was voiced by US Fed Chair Jerome Powell at the end of May, after which there was another jump in consumer prices. In addition, we have already received the first data on consumer confidence in the US. The results were lower than expected, which will negatively affect the US dollar as the main currency. In the long term, this indicates a decrease in investment activity and a greater emphasis on maintaining existing capital.
On June 29, Eurostat will publish consumer inflation expectations for June. The main forecast of market participants is focused near the level of 45.6, however, taking into account record inflation, this indicator may be underestimated. In this case, the central bank will have no choice but to raise the key rate more actively. This will negatively affect Bitcoin in another key region and significantly reduce investment in high-risk assets.
Another important event on June 29 will be the publication of the US GDP report for the second quarter of 2022. The expected fall in the US economy is estimated at 1.5%. This is the most important factor for Bitcoin, since the further policy of the Fed will depend on this indicator. It is likely that with a negative outcome, we should expect a further increase in the key rate, which could coincide with the $95 billion withdrawal of liquidity in July, which will lead to an even more serious crisis in the crypto market.
On Thursday, US unemployment statistics will be published. About 228,000 new jobless claims are expected, but if this figure is higher, then the Fed will have to revise the monetary policy in the direction of easing. In this scenario, the market gets short of breath and a local wave of investment. If the Fed remains inactive, then this will be a positive signal for long-term owners of Bitcoin. This is due to the fact that the increase in the unemployment rate, which is accompanied by the inaction of the authorities in connection with the difficult economic situation, is a prerequisite for further stagflation. Bitcoin could be a key asset in this economic upheaval due to its scarcity.
Given all the fundamental events at the end of the week, you need to be prepared for an increase in the level of volatility. This, in turn, will lead to an increase in trading volumes and impulse price movements. The current realities of the market do not leave hope that the price spurts may have an upward direction.
Technical indicators on the daily timeframe have also acquired a downward direction. Stochastic and RSI are moving towards 30, indicating increased selling pressure. MACD also completed the implementation of the bullish crossover and turned sideways. All these metrics indicate that the market is entering a phase of another decline.
