Bitcoin is currently trading at $76,496.01, a 3% decline in morning Asian trading, hovering near $77,000 as the market prepares for a week filled with significant macroeconomic events. The move is driven more by caution than a change in sentiment.
According to Enflux, a Singapore-based market maker, traders are hesitant to drive bitcoin prices higher ahead of the upcoming rate decision and key data releases, including GDP, PCE inflation, and the Employment Cost Index. These releases will shape expectations for a potential rate cut by the Fed in the second half of the year.
Oil prices, with Brent crude remaining above $100, are currently the main constraint, complicating the inflation outlook and making it challenging for the Fed to adopt a dovish stance. Enflux notes that the market is operating under two competing assumptions: that geopolitical tensions will eventually ease, but not quickly enough to influence near-term policy. This has led to a 95% chance of no rate change in June, creating an ambiguous backdrop for risk assets.
As a result, bitcoin has struggled to break above key technical levels, trading roughly 4% below its short-term holder cost basis near $80,700. A decisive move above this level would likely require a clear signal from the Fed that oil-driven inflation is temporary. Otherwise, Enflux expects bitcoin to trade tentatively into Thursday's data releases, with any significant move likely tied to the macro prints rather than the Fed statement itself.
Looking beyond this week, a slowdown in AI demand, as reported by The Wall Street Journal, may also impact bitcoin's price. Listed BTC mining companies have taken on significant debt to pivot to hosting AI data centers, a venture believed to be more profitable than mining. A slowdown in this pivot could potentially slow down selling, but the timing of this relief is uncertain, and any sell pressure on semiconductor and data stocks due to weaker tech and risk appetite would likely bring down the crypto market first.