Bitcoin, also known as BTC, briefly tested the $72,000 resistance level on June 7 before experiencing a sharp decline to $69,000. Two key indicators, including the long-to-short metric of top traders on exchanges, are signaling a decrease in optimism among Bitcoin investors. Is this a sign that the current Bitcoin bull market is coming to an end, at least in the short term?
Bitcoin and gold both saw a decline in value as the S&P 500 index reached a new all-time high on June 7. This milestone was achieved after the United States reported a significant increase of 272,000 nonfarm payroll jobs in May, surpassing the previous month’s figure of 165,000 jobs. A robust labor market is generally positive for credit and consumption, benefiting listed companies. People are more inclined to spend when the job market is strong, regardless of the cost of borrowing.
The relationship between job creation and corporate earnings is particularly favorable, especially as wages rose by 0.4% in May compared to the previous month. The participation of prime-age workers, aged 25-54, also reached its highest level in 22 years at 83.6%. Despite a decline in the U.S. consumer sector stocks, the tech sector compensated for this shift.
Robert Sockin, Citi’s senior global economist, highlighted the risk of a recession if the U.S. Federal Reserve keeps interest rates above 5.25% for an extended period. However, the most recent U.S. unemployment data indicates no immediate risk, with the rate standing at 4%. Investors are currently pricing in a 51% chance of a rate cut by the Fed in September, down from 69% the day before.
Bitcoin was not the only asset affected by macroeconomic data and reduced expectations of interest rate cuts. Gold prices dropped to $2,300 from a high of $2,390 on June 7, while the U.S. Treasury two-year yield rose from 4.74% to 4.87%. This suggests that traders are moving away from fixed-income investments.
Despite Bitcoin’s decline following gold and fixed-income assets, the stock market continues to perform well. This could be attributed to the significant cash reserves held by the largest U.S. listed companies, which can be used for stock buyback programs or invested in money-market funds.
To gauge the sentiment of whales following the rejection at the $72,000 resistance level, one can analyze data from BTC futures markets. The long-to-short ratio of top traders across different types of contracts indicates a decrease in bullish sentiment. However, metrics like the stablecoin premium in China show a slight increase in retail trader demand, suggesting that panic selling is not prevalent among whales or retail traders.
Overall, while the decline in the long-to-short ratio is concerning, there are signs that support levels are holding strong, indicating that the Bitcoin market may recover in the near future. This article serves as general information and should not be considered legal or investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.