Bitcoin’s price plummeted by 5.6% on June 18, dropping to $64,300, marking its lowest point in over a month. This decline over six days aligns with U.S. macroeconomic data that indicates a slowdown in the economy, particularly in retail sales and employment. Despite the Federal Reserve maintaining interest rates at their highest level in twenty years, the derivatives market’s strength suggests a potential recovery in Bitcoin’s price.
The risk of a U.S. recession and high interest rates are hindering Bitcoin’s price growth. U.S. retail sales only saw a modest 0.1% increase from the previous month, falling short of economists’ expectations. This data suggests a lackluster second-quarter gross domestic product. While some experts like Paul Ashworth of Capital Economics view this as concerning, others, like Matthew Luzzetti of Deutsche Bank, see it as a return to a more normal economic pace.
Federal Reserve Bank of New York President John Williams remains optimistic about the U.S. economy and labor market, expecting inflation to decrease in the second half of the year. However, the high-interest rate environment is favorable for fixed-income investments, but detrimental to Bitcoin. The increase in the S&P 500 index and the outflow of $562 million from U.S. spot Bitcoin ETFs add to the negative sentiment among investors.
Market sentiment can be gauged by analyzing the long-to-short ratio of top traders on exchanges. Despite Bitcoin’s failure to hold the $68,000 support level, traders at Binance and OKX have shown a strong demand for leveraged long positions. Bitcoin whales and miners also appear cautiously optimistic, with a decline in demand for put options and reduced sell pressure from miners.
Considering the bullish stance of Bitcoin derivatives traders during the recent dip in price, along with the strong outflows from spot ETFs, there may not be additional pressure on Bitcoin’s price. The current macroeconomic conditions suggest that the Fed may cut rates by the end of the year, further supporting a potential recovery in Bitcoin’s price.
Disclaimer: This article is for informational purposes only and should not be considered legal or investment advice. The opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.