Bitcoin is currently trading at $80,333.38, down 3% in morning trading, as markets prepare for a week of significant macroeconomic events. The decline appears to be driven by caution rather than a shift in market sentiment.
Enflux, a Singapore-based market maker, notes that traders are hesitant to drive bitcoin prices higher ahead of the upcoming rate decision and data releases, including GDP and inflation reports. The high oil prices, with Brent crude above $100, are complicating the inflation outlook and making it challenging for the Fed to signal a dovish stance.
According to Enflux, the market is operating under two competing assumptions: that geopolitical tensions will eventually ease, but not quickly enough to influence near-term policy, effectively pricing out rate cuts for June. This has created an ambiguous backdrop for risk assets, making it difficult for bitcoin to break above key technical levels. The cryptocurrency is trading roughly 4% below its short-term holder cost basis, a level often viewed as a proxy for marginal buyer conviction. A clear signal from the Fed that oil-driven inflation will prove temporary is likely necessary for bitcoin to move decisively above this level.
Meanwhile, a less visible force, the slowdown in AI demand, may also shape bitcoin's next moves. 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 slow selling, but the timing of this relief is uncertain, and any slowdown in AI expansion would likely add another layer of uncertainty to the market.