Bitcoin is leading the decline to the $65,000 level, so the cryptocurrency market is crumbling. This is a notable drop from its March all-time high of $73,700. Expert market analyst Michael van de Poppe has examined the factors driving ongoing market mayhem.
Van de Poppe noted last Wednesday’s release of the Consumer Price Index (CPI) data as a crucial event affecting the market. Affecting Federal Reserve interest rate decisions, the CPI came in under projections. The headline CPI was 3.3%; the core CPI was 3.4% against the expected 3.5%. For risk assets, this lower-than-expected inflation figure indicates either a positive future cut view or a likely rate decrease.
The publishing of the Producer Price Index (PPI) statistics likewise revealed lower-than-anticipated numbers with a regular PPI score of 2.2% against the projected 2.5% and a Core PPI Y/Y score of 2.3% against the expected 2.4%. Negative numbers in the monthly PPI figures also often represent risk on assets like cryptocurrencies. Notwithstanding these positive signals, the Bitcoin market kept spiraling down.
Bitcoin And Consumer Sentiment
Furthermore, the release of consumer mood data on Friday affected the dynamics of the market. With a score of 65.6 instead of the expected 72.1, consumer sentiment—the main market indicator—turned in below expectations. This low consumer confidence pointed to an economic crisis, which may encourage a good view of risk-on assets like cryptocurrencies.
Still, Federal Reserve Chairman Jerome Powell delivered an unusually upbeat speech while keeping a firm stance on interest rates and adjusting projected rate cuts for 2024. This hawkish attitude increased market uncertainty, hence accentuating volatility.
Van de Poppe also noted the declining Treasury Bond Yields, which generally reflect favorable conditions for Bitcoin and other risk-on assets. The 2-year Treasury Bond Yield dropped to its lowest point in two months, while the 10-year Yield was the lowest since early April.
Usually, these declines indicate a greater likelihood of possible rate cuts. However, the unexpected strength of the US Dollar brought about by the European Central Bank’s rate drop upset the market dynamics. Against ECB operations, the strong Dollar significantly impeded Bitcoin’s recovery.
The cryptocurrency market, particularly Bitcoin, has suffered notable declines and has not recovered from prior highs. The market has not responded favorably even if excellent economic indicators suggest a likely rate decrease and attractive conditions for risk-on assets.
The drop has also come from anxiety around events like the Ethereum ETF listing. Given prospective rate cuts ahead and the strength of the Dollar, the following weeks will be crucial in determining the market’s direction.At the time of writing, Bitcoin was trading at $65,280, up over five percent in the past seven days and two percent in the previous twenty-four hours.
