Bitcoin Surges Amid Renewed Interest in ETFs and Decreased Inflation Forecast
Summary:
Bitcoin (BTC) has seen a slight increase of approximately 1.5% in the past 24 hours, suggesting a renewal of risk appetite among investors. This rise is accompanied by inflows into Bitcoin ETFs and VanEck's application for a Solana ETF. Economists predict a decrease in the Federal Reserve's preferred inflation measure, potentially leading to reduced interest rates in 2024, which could in turn boost investors' appetite for riskier assets like crypto. Despite a potential bearish continuation, a clear break above certain resistance levels might drive Bitcoin's price upwards.
In the last 24 hours, Bitcoin (BTC) has recorded a slight surge of approximately 1.5% to reach a high of $61,700 on June 28. This ascent is part of widespread gains in the cryptocurrency sphere, triggered by renewed interests in Bitcoin Exchange-Traded Funds (ETF) and VanEck's application for a Solana ETF. BTC/USD four-hour price graph. Credit: TradingView
Today's modest increase in Bitcoin's value corresponds with three consecutive days of inflows to the American Bitcoin ETFs, signaling a revival of risk tolerance after a week of outflows. On June 27, the Bitcoin ETFs under US jurisdiction managed assets valued at $14.44 billion, rebounding from the $14.383 billion low set three days prior. In contrast, these funds were managing $15.68 billion on their high of June 6. Collective Spot Bitcoin ETF inflows. Credit: Farside Investors
Additional positive momentum for Bitcoin and other cryptos has been provided by VanEck, through their recent application for a new spot Solana ETF in the US. The Wall Street firm currently has two outstanding crypto ETF applications under consideration by the U.S. Securities and Exchange Commission (SEC), the second of which is for Ethereum.
With the release of May's Personal Consumption Expenditures (PCE) price index, Bitcoin's performance today mirrors similar bullish trends in U.S. stock futures. Economists surveyed by Bloomberg forecast that the Federal Reserve's preferred inflation measure may have reduced to an annualized rate of 2.6% last month from 2.8%, representing the lowest rate since March 2021. However, this still surpasses the bank’s inflation target of 2%.
A decrease in inflation could open up the possibility of the Fed reducing interest rates in 2024. Bond traders currently anticipate a 57.9% probability of the Fed decreasing the key lending rates by 25 basis points in September, a stark increase from 41.7% a month ago.
Reduced interest rates decrease the opportunity costs of retaining safe-havens such as U.S. bonds. These typically heighten investor attraction to higher-risk assets including crypto and stocks, boosting Bitcoin's current rise.
Today, Bitcoin's uptrend is indicative of price variability within an ongoing consolidation trend. Notably, this pattern appears to be evolving into a pennant, presenting an increased probability of a bearish next step, given BTC's past downtrend. BTC/USD four-hour price graph. Credit: TradingView
A bearish pennant is validated when the price dips below its lower trendline falling as low as the previous downtrend's height. Applying this technical principle to Bitcoin's present price movements would place its July downside target at $56,250 - approximately 8.5% down from current figures.
Bitcoin’s propensity for a breakdown is further reinforced by two formidable resistance levels: the 50-4H exponential moving average (50-4H EMA; denoted by the red wave) and the descending trendline. Both coincide with the pennant's upper trendline at roughly $62,000.
A clear break above this group of resistance levels might nullify the bear pennant entirely, potentially driving BTC's price towards the 200-4H EMA (the blue wave) at approximately $65,000.
This news piece does not offer investment advice or suggestions. Each investment or trading action embodies risk; hence, readers are encouraged to undertake their independent research before making any decisions.
Published At
6/28/2024 4:16:32 PM
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