Bitcoin's Brief Touch of $72,000, Market Pessimism and the Impact of U.S. Job Data
Summary:
Bitcoin briefly approached the $72,000 resistance on June 7 but slid to $69,000, accompanied by growing investor pessimism, casting doubt on the short-term Bitcoin bull market. Despite the record intraday high of the S&P 500, backed by promising U.S. employment numbers, Bitcoin and gold both slipped, impacted by investors' revised expectations of interest rate cuts. Based on BTC futures market observation, there is a noticeable decline of bullish bets among top traders. Meanwhile, a steady stablecoin premium in China suggests a moderate increase in retail trader demand, implying that neither big nor small investors are panic selling.
On June 7, Bitcoin (BTC) almost reached the $72,000 resistance level, but saw an abrupt turnaround, closing the day at $69,000. Two key pointers, including the exchange traders' bullish-to-bearish ratio, indicate a growing pessimism among Bitcoin investors, raising questions about the short-term viability of the Bitcoin bull market.
The S&P 500 index hit an unprecedented intraday high on the same day, backed by the U.S. revelation of an addition of 272,000 nonfarm payroll jobs in May, far outstripping the preceding month’s increase of 165,000 jobs. A robust labor market is typically a driver for credit, consumption, and therefore, public companies. Consumers are more likely to spend when job security is assured, despite the capital cost.
The job growth-corporate profit correlation looks positive as the U.S. Bureau of Labor Statistics reports a 0.4% wage increment in May compared to April. Prime-age (25-54) workers' participation hit a 22-year high at 83.6%. Despite a drop in consumer sector stocks, the tech sector balanced out the dip.
Citi's senior global economist, Robert Sockin, stated that a protracted retention of interest rates above 5.25% by the U.S. Federal Reserve (Fed) would escalate recession risks, according to Yahoo Finance. However, the most recent 4% U.S. unemployment data does not raise an immediate concern. As per the CME FedWatch Tool, investors anticipate a 51% probability of a Fed rate cut by September, reduced from 69% a day ago.
Bitcoin was not the lone casualty impacted by macroeconomic data and dwindling anticipations of rate cuts. Gold nosedived to $2,300 from an early June 7 high of $2,390. Concurrently, the U.S. Treasury's two-year yield rose from 4.74% to 4.87%, revealing traders shunning fixed-income positions.
Given this scenario, Bitcoin aficionados will be monitoring data from BTC futures markets to gauge whale sentiment following the $72,000 barrier. The long-to-short ratio among top traders, incorporating spot, perpetual, and monthly futures positions, influences market direction. The current Binance ratio of 1.35 denotes less optimism compared to May 31's 1.58, favoring bullish positions. The average long-to-short ratio has dipped to a two-week low, indicating potential bearish undercurrents.
On the contrary, a marginal uptick in stablecoin premiums in China alludes to increased retail investor demand. The USDC premium in China hovers above the 1% neutral mark, unaffected by the BTC price dip on June 7. This implies neither panic selling from whales nor retail investors, and builds the case for Bitcoin's top traders' long-to-short ratio to improve as the $69,000 support level holds strong.
This article is aimed at general informational purposes and should not serve or be viewed as legal or investment guidance. Opinions and thoughts expressed are solely those of the author and do not mirror the views and opinions of Cointelegraph.
Published At
6/7/2024 9:59:25 PM
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