BTC Selling Continues

Bitcoin prices are seeing fresh selling pressure today as the leading digital asset extends its recent move lower. BTC futures have fallen around 14% from the June highs with last week marking BTC’s second-worst week of 2024 so far. The shift lower in BTC comes amidst falling Fed easing expectations. The bank had previously been expected to cut rates at least three times this year, starting with a cut this month. However, the Fed recently slashed projected cuts down to 1, expected to start later in the year. Market pricing has recently shifted away from expecting a cut in September to a later cut in November.

Hawkish Fed Shift

The hawkish shift in the Fed’s outlook on rates and inflation (both inflation and dot plot forecasts revised higher) has helped keep USD supported. With risks that easing ends up being delayed until next year unless we see a sharp drop in inflation over coming months, BTC looks vulnerable to further downside if USD continues to move higher.

Inflation Remains Key

With this in mind, traders will be carefully monitoring inflation and inflation-linked data over the coming months. However, it is worth noting that there are bullish risks for BTC too. If we see a sharp drop in inflation this should see traders rebuilding their near-term easing expectations, weighing on USD. The Fed has noted that there could still be more than one cut this year, depending on inflation, meaning we could still see bullish reversal in BTC.

Technical Views

BTC

The sell-off in BTC has seen the market turning sharply lower. Price is now pushing lower within the corrective bear channel once again and is fast approaching a test of the 60,695 lows. This is a key support level for the market and bulls will need to defend this area to prevent a deeper drop to 57,215 next and the channel lows thereafter.