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Bitcoin Price Prediction as BTC Drops 2.5% – Bigger Sell-Off Incoming?

Arslan Butt
Last updated: | 4 min read
Bitcoin Price Prediction
Bitcoin Price Prediction

Bitcoin (BTC), the world’s leading cryptocurrency, continued its downward trajectory, trading around the $67,925 level and hitting an intraday low of $67,786. This recent decline of 2.5% has sparked concerns about a potential bigger sell-off.

The drop can be linked to the robust May employment report from the US, which showed 272,000 jobs added, dampening hopes for a rate cut by the Federal Reserve.

This strong job growth has bolstered the US dollar and driven up Treasury yields, contributing to Bitcoin’s losses. As investors grapple with these developments, Bitcoin price prediction remains a hot topic, with many speculating on the cryptocurrency’s next move.

Bitcoin Price Volatility Amid ETF Inflows and Market Changes

Despite significant investment in bitcoin ETFs, with $886.6 million in daily inflows, bitcoin’s value couldn’t sustain above $70,000. This drop was driven by traders exploiting price differences through arbitrage between ETFs and CME bitcoin futures. Additionally, Robinhood’s acquisition of Bitstamp aims to bolster its global crypto presence.

Semler Scientific is following Microstrategy’s strategy by investing in Bitcoin as part of its treasury assets. Market watchers are closely monitoring CPI data and comments from Fed Chair Jerome Powell for insights into potential rate cuts.

Bitcoin’s inability to stay above $70,000 despite significant ETF investments highlights market vulnerability. Traders exploiting arbitrage opportunities and anticipation of Powell’s remarks on rate cuts are key factors impacting Bitcoin’s price volatility.

Impact of Strong US Dollar and Positive Job Data on Bitcoin Prices

A robust May employment report, showing 272,000 jobs added, bolstered the US dollar and led to a drop in bitcoin prices. The Nonfarm Payrolls report exceeded expectations, reducing the likelihood of a September rate cut from 70% to around 50%.

This caused Treasury bond yields to rise and the US Dollar to reach its highest level in nearly a month. Investors now expect only one 25-basis-point reduction later in the year, possibly in November or December.

Average Hourly Earnings increased by 4.1% over the past year, surpassing expectations. This could lead to higher prices and prompt the Federal Reserve to maintain higher interest rates longer. Consequently, the stronger US dollar and positive job data pushed bitcoin prices lower.

In summary:

  • Strong US dollar and robust job data led to BTC price drop.
  • Investors revised rate cut expectations, causing Treasury yields to rise.

Federal Reserve’s Economic Projections and Budget Deficit Trigger Bitcoin Dip

Bitcoin (BTC/USD) has experienced a notable dip, with its price declining to $67,850. A significant factor behind this drop is the recent economic data and projections from the US Federal Reserve.

The Federal Funds Rate remains at 5.50%, maintaining high borrowing costs. The Federal Open Market Committee (FOMC) economic projections and statement highlighted persistent inflationary pressures and the potential for sustained high interest rates, which spooked investors.

Additionally, the Federal Budget Balance showed a substantial deficit of -$259.3 billion, a stark contrast to the previous surplus of $209.5 billion. This negative fiscal data adds to concerns about the US economic outlook, further strengthening the US dollar and increasing Treasury yields.

These developments have negatively impacted Bitcoin, as a stronger dollar and higher yields typically divert investment away from riskier assets like cryptocurrencies. Consequently, Bitcoin’s price has been under pressure, reflecting broader market reactions to these economic indicators.

Bitcoin Price Prediction

Bitcoin (BTC/USD) is trading with a dramatic bearish bias, with the pivot point standing at $68,350, suggesting a bearish Bitcoin price prediction.

Immediate resistance levels are observed at $69,200, $70,150, and $71,100. On the downside, immediate support is at $67,850, with further support at $66,600 and $65,900.

Technical indicators also reflect a bearish outlook. The Relative Strength Index (RSI) is at 31, indicating oversold conditions and potential for further downward movement.

The 50-day Exponential Moving Average (EMA) is at $69,500, showing that the current price is significantly below this average, signalling sustained bearish pressure.

Bitcoin Price Prediction - Source: TradingView
Bitcoin Price Prediction – Source: TradingView

A bearish engulfing candle on the 4-hour timeframe, especially below the $68,350 level, suggests a continuation of the downward trend. Both RSI and EMA indicators support this bearish stance.

In conclusion, Bitcoin remains bearish below $68,350. A break above this level could shift momentum towards a bullish bias, but current indicators favor continued decline.

Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.