The bitcoin price has dropped by 3% in morning trading, hovering near $77,000 as investors await significant macroeconomic announcements. This movement appears to be driven by caution rather than a shift in market sentiment. According to Singapore-based market maker Enflux, traders are hesitant to increase bitcoin's value before the Fed's rate decision and subsequent data releases, including GDP and inflation figures. The primary constraint on bitcoin's price is currently oil, with Brent crude remaining above $100 and complicating the inflation outlook.
This has raised the bar for a dovish signal from the Fed, making it less likely for rate cuts to occur in June. As a result, bitcoin has struggled to break above key technical levels, trading roughly 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, may also impact bitcoin's price in the long term. Listed BTC mining companies have taken on significant debt to pivot to hosting AI data centers, and a slowdown in this pivot could potentially slow down selling.
However, the timing of this slowdown may not immediately resolve the current uncertainty surrounding bitcoin's price, keeping it trading in a narrow band as investors await clearer signals.