Bitcoin experienced significant price fluctuations this week, driven by various economic indicators and market reactions. The cryptocurrency’s price movements were influenced by the Federal Reserve’s policy decisions, inflation data, and whale accumulation activities, leading to a volatile market environment.
Key Takeaways
- Bitcoin’s price fluctuated significantly due to economic indicators and market reactions.
- The Federal Reserve’s hawkish stance impacted Bitcoin’s early gains.
- Whale accumulation activities played a crucial role in the market dynamics.
- Inflation data and interest rate decisions were pivotal in shaping market sentiment.
Federal Reserve’s Hawkish Stance
The Federal Open Market Committee (FOMC) of the U.S. Federal Reserve held its benchmark fed funds rate range at 5.25%-5.50%. However, the economic outlook now calls for just one 25 basis point rate cut this year, down from the previous projection of three rate cuts. This hawkish turn led to Bitcoin giving up its early session gains.
Fed Chairman Jerome Powell emphasized that inflation remains too high and the central bank’s focus is on returning it to the 2% target. This announcement caused Bitcoin to return to $67,300, flat over the past 24 hours, and affected U.S. stocks and bonds, which closed the day with gains but well off session highs.
Bitcoin Price Dips and Lack of Support
Bitcoin traded below $68,000 during the June 11 Asia trading session, with a 3% dip taking it to lows of $67,320 on Bitstamp. The lack of support at the key $69,000 level and thin exchange order book liquidity contributed to this downward move. Analysts warned of further BTC price losses due to insufficient bid support.
Material Indicators noted that Bitcoin had formally rejected $69,000 as support and had also given up the 21-day moving average, a key short-term trendline. This move is expected to continue, influenced by upcoming comments from Fed Chairman Jerome Powell and economic reports.
Impact of Consumer Price Index (CPI) Data
The U.S. Consumer Price Index (CPI) report for May showed an unexpected slowdown in inflation, which initially sent crypto, stock, and bond markets sharply higher. Bitcoin welcomed the soft inflation read, jumping to $69,400, up nearly 4% over the past 24 hours. However, the hawkish turn in the Fed’s economic projections later took the steam out of these rallies.
Traders anticipated that looser monetary conditions would fuel the next leg of the crypto rally to record prices. However, the recent hotter inflation figures and diminished hopes for rate cuts led to Bitcoin’s tumble from all-time high prices above $73,000 in March to below $57,000 in May.
Whale Accumulation Activities
Bitcoin whales took advantage of the price slump on June 11, accumulating a combined 20,600 BTC worth $1.38 billion. This was the largest inflow day for Bitcoin whales since February 28. The accumulation came as Bitcoin’s supply on exchanges fell to its lowest level since December 2021, indicating a strengthening market where investors anticipate upward price action over the mid to long term.
Ethereum whales also showed significant activity, buying over 240,000 Ether worth nearly $840 million. However, unlike Bitcoin, the supply of Ether on cryptocurrency exchanges increased in recent days.
Conclusion
The past week has been a rollercoaster for Bitcoin, with significant price movements driven by economic indicators, market reactions, and whale activities. The Federal Reserve’s policy decisions and inflation data played pivotal roles in shaping market sentiment, leading to a volatile environment for the cryptocurrency market.
Sources
- Bitcoin Price (BTC) Gives Back Gains on Hawkish Fed Outlook, CoinDesk.
- BTC price risks $60K dive as Bitcoin bid liquidity thins on new 3% dip, Cointelegraph.
- Stock Chart Icon, CNBC.
- Bitcoin Price (BTC) Rises After Consumer Price Index Rises Less Than Forecast, CoinDesk.
- Bitcoin whales scoop $1.4B in 24 hours this week amid market correction, Cointelegraph.
