The bitcoin price has fallen by 3% in morning trading, hovering around $77,000, as investors exercise caution ahead of key economic data releases and the Federal Reserve's rate decision. According to Enflux, a market maker, traders are hesitant to drive up bitcoin's price before the Fed's decision and the release of GDP, inflation, and employment data. The high price of oil, currently above $100, is complicating the inflation outlook and making it more challenging for the Fed to adopt a dovish stance.
Enflux notes that the market is operating under two conflicting assumptions: that geopolitical tensions will eventually ease, but not quickly enough to influence near-term policy decisions. As a result, rate cuts for June are unlikely, and the outlook for risk assets is more ambiguous. Bitcoin has struggled to break through key technical levels, trading about 4% below its short-term holder cost basis. A decisive move above this level would likely require a clear signal from the Fed that oil-driven inflation is temporary.
Meanwhile, a slowdown in AI demand, as reported by The Wall Street Journal, could potentially impact bitcoin's price by reducing the selling pressure from miners who have taken on debt to pivot to hosting AI data centers. However, the timing of this slowdown is uncertain, and any relief from reduced miner selling would likely come later, keeping bitcoin trading in a narrow range as the market awaits a clearer signal.