Bitcoin (BTC), the world’s oldest and most valued cryptocurrency, remained under pressure around $65,100, hitting an intraday low of $64,700. Cryptocurrency hedge funds cut their Bitcoin holdings to the lowest level since October 2020, intensifying selling pressure.
Major altcoins, including Ethereum (ETH), Dogecoin (DOGE), Ripple (XRP), Solana (SOL), and Litecoin (LTC), also declined, with the Market Fear & Greed Index at 52 (Neutral). Uncertainty over Federal Reserve rate cuts, with only one cut projected this year instead of three, has further impacted Bitcoin.
Traders are watching upcoming US economic data for further direction.
Bitcoin Price Impacted by Federal Reserve Policy Uncertainty
On the US front, the dollar has strengthened despite the uncertainty surrounding the Federal Reserve’s interest rate decisions. This has led to Bitcoin trading within a narrow range as traders await clearer signals.
Initially, the Fed projected three rate cuts for this year, but now expects just one, boosting US Treasury bond yields and the dollar.
Additionally, lackluster US Retail Sales data—Retail Sales m/m rose by only 0.1% in May, below the expected 0.3%, and Core Retail Sales m/m fell by 0.1%—points to sluggish economic activity.
US retail sales barely rose in May, bolstering economists' expectations that the Federal Reserve could start cutting interest rates in September https://t.co/akUL2oaXzs pic.twitter.com/fqLfegbi2V
— Reuters Business (@ReutersBiz) June 18, 2024
Weak consumer and producer prices further fuel expectations that the Fed may ease monetary policy soon. The latest data showed US consumer prices rising just 0.1% in May, while producer prices were unchanged.
This has created a mixed outlook for Bitcoin, as the reduced likelihood of aggressive rate cuts limits its potential gains, while the possibility of cuts later in the year supports sentiment.
Upcoming Economic Events
- 12:30 USD: Unemployment Claims: 235K (forecast), 242K (previous)
- 12:30 USD: Building Permits: 1.45M (forecast), 1.44M (previous)
- 12:30 USD: Philly Fed Manufacturing Index: 4.8 (forecast), 4.5 (previous)
This combination of economic data and policy uncertainty is keeping Bitcoin’s price in check, as market participants remain cautious.
Hedge Fund Withdrawal from Bitcoin Drives Price Below $65,000
Bitcoin’s recent drop below $65,000 was unexpected, and the reasons behind it are complex. However, a significant factor may be the retreat of cryptocurrency hedge funds from the market. Over the past 20 trading days, these funds have reduced their exposure to Bitcoin to just 0.37, the lowest level since October 2020. This decreased exposure helps explain the recent steep decline in Bitcoin’s price.
Hedge funds typically follow Bitcoin’s price changes if their beta value is one, indicating a strong correlation. A beta of less than one, however, indicates reduced exposure. The drop to a beta of 0.37 means hedge funds are now far less affected by Bitcoin’s price fluctuations than in previous years.
The last time hedge fund exposure was this low was in October 2020, just before a significant Bitcoin bull run. Hedge funds, known for their strategic investments and access to advanced data, may have anticipated further drops or volatility. This cautious approach might be due to changing investment strategies, macroeconomic conditions, or regulatory uncertainties.
Key Points:
- Hedge funds reduced Bitcoin exposure to 0.37, the lowest since October 2020.
- Reduced exposure indicates hedge funds’ cautious approach due to expected volatility.
- Increased selling pressure from hedge fund withdrawal pushed Bitcoin below $65,000.
This reduced exposure has likely increased selling pressure, contributing to Bitcoin’s fall below the crucial $65,000 mark.
Bitcoin Price Prediction
Bitcoin (BTC/USD) is currently trading at $65,100, up 0.64%. On the 4-hour chart, the pivot point is $65,700, a critical level for determining the next price movement. Closing of candles under the pivot point level of the $65,500 mark suggests a bearish Bitcoin price prediction.
Immediate resistance is noted at $66,800, followed by $67,800 and $68,500. On the downside, immediate support is at $64,150, with further support at $63,200 and $62,300.
The Relative Strength Index (RSI) is at 47, indicating neutral momentum. The 50-day Exponential Moving Average (EMA) stands at $65,600, aligning with the downward channel extending resistance near the $65,500 level, limiting Bitcoin’s upside movement.
In conclusion, the outlook remains bearish below $65,500, but a break above this level could boost bullish momentum. Conversely, staying below $65,500 could drive a continued downtrend.
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Bitcoin Price Prediction 2024 – 2034
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