Bitcoin
and other cryptocurrencies rose Tuesday but remained within a well-worn trading range, with some market observers seeing a jump in prices as premature as inflation data loom and the outlook for interest rates remains uncertain.
The price of
Bitcoin
has advanced 1.5% over the past 24 hours to $30,500, in the middle of the trading range between $30,000 and $31,000 that has persisted for weeks in a period of stagnation. While Bitcoin rallied in June on the back of news that
BlackRock
(ticker: BLK) and others in traditional finance had filed for spot Bitcoin exchange-traded funds, the momentum seems largely lost with a decision still far off.
“I think the bullish sentiment with Bitcoin is getting a little ahead of itself. There was certainly a lot of momentum resulting from all these spot Bitcoin ETF applications, but that appears to be somewhat tapering off now,” said Brent Xu, the CEO of Umee, a decentralized finance bond-market platform.
Amid an absence of crypto-specific catalysts, Bitcoin is likely to move Wednesday alongside the
Dow Jones Industrial Average
and
S&P 500
following the release of the consumer-price index (CPI) for June. CPI is a key measure of inflation and one of the last major U.S. economic indicators before the Federal Reserve’s next decision on interest rates at the end of the month.
The Fed has raised rates aggressively since March 2022 to fight decades-high inflation, battering risk-sensitive assets like stocks and cryptos, which tend to fall when rates and bond yields rise. While risk assets rallied to start the year amid optimism that the worst of the financial tightening was over, officials from the Fed have reiterated a tough stance on inflation. Traders say there remain significant downside risks for cryptos amid an uncertain outlook for rates, which are expected to be raised in July and perhaps September, according to market pricing.
“I suspect that there will be a lot more volatility ahead as the market adjusts to these higher-than-usual rate hikes, and that the recent bounce we experienced will likely be short-lived,” said Xu. “Risk assets in general seem poised for a pullback, perhaps a major one. It’s hard for me, then, to be bullish, and I think the smarter traders are positioning themselves for choppy months ahead instead of anything resembling a bull market.”
Beyond Bitcoin,
Ether
—the second-largest crypto—gained 1% to $1,875. Smaller cryptos, or altcoins, were rising, with
Cardano
climbing 3% and
Polygon
popping 9%. Memecoins were more muted, with
Dogecoin
and
Shiba Inu
up 1% each.
Write to Jack Denton at [email protected]
Read the full article here
