As the inflation data that may determine when the Federal Reserve (Fed) will begin cutting interest rates is about to be released, Bitcoin (BTC) has dropped 3% in the past 24 hours, causing the previous bullish breakout to fail.
From a technical perspective, Bitcoin’s price trend from early March to the present has formed a triangle convergence pattern. Although the cryptocurrency experienced a breakout on Monday, it fell back into the pattern last night. Failed breakouts often lead to short-term traders closing or reversing bullish bets due to expectations of larger price declines. However, Markus Thielen, the founder of digital asset research firm 10x Research, reminds investors not to overinterpret Bitcoin’s failure to maintain a bullish trend.
Source: CoinDesk
The US Bureau of Labor Statistics will release the March 2024 Consumer Price Index (CPI) data at 8:30 pm Taiwan time on Wednesday. Thielen stated in an interview with CoinDesk:
Thielen added that the Nasdaq index rose on Tuesday, providing a positive signal for Bitcoin and other risk assets, suggesting that Bitcoin’s decline may be temporary. Cryptocurrencies closely follow the trend of the Nasdaq index and the ratio of the Nasdaq to the S&P 500 index.
Strong economic and labor market conditions have forced the market to adjust expectations for the timing of the Fed’s first interest rate cut and the number of rate cuts this year. On Monday, data from Fed Funds Futures showed a significant decrease in the expectation of a 60 basis point rate cut this year compared to the 150 basis points at the beginning of January. The probability of a 25 basis point rate cut in June is less than 50%, lower than the nearly 60% before the optimistic nonfarm payrolls report was released on Friday.
Noelle Acheson, the author of the newsletter “Crypto Is Macro Now,” stated on Tuesday that the market has started to lower expectations for interest rate cuts. According to CME pricing, the probability of a 25 basis point rate cut in June has dropped to 50%. “In other words, there may be some volatility, but it feels like the market has become more pessimistic about inflation prospects.”
Acheson added:
Source: CoinDesk
