In the ever-evolving world of Bitcoin, the current price remains stable below the $27,000 mark. As investors eagerly monitor the price action, let’s delve into the latest market updates that are influencing Bitcoin’s trajectory.
Notably, Goldman Sachs predicts that US inflation will decline slower than the market expects, introducing a new layer of uncertainty.
In addition, the ongoing legal battles between the SEC and prominent players like Binance and Ripple are weighing heavily on the minds of market participants.
Amidst all this, JPMorgan sparks a discussion on the future of the US dollar in the face of China’s projected economic dominance.
With these factors in play, let’s explore how they shape the current landscape of the Bitcoin market.
Goldman Sachs: US Inflation Expected to Ease at a Slower Pace Than Market Forecasts
In a note released on Friday, analysts from Goldman Sachs, led by chief interest rates strategist Praveen Korapaty, cautioned that the expected rate of decline in US inflation is projected to be slower than the current market expectations, as reported by Bloomberg.
The analysts at Goldman Sachs believe that investors may be underestimating the pace of inflation decline, assuming that a sharp economic growth slow would lead to a more rapid decrease in inflation.
They also suggest that market sentiment towards energy costs may be more pessimistic than what is reflected in commodities futures.
During their recent Federal Open Market Committee (FOMC) meeting, the Federal Reserve decided to pause its cycle of interest rate hikes after implementing ten consecutive increases.
The decision was influenced by the May report from the US Bureau of Labor Statistics (BLS) which showed a decrease in inflation from 4.9% to 4%, marking the smallest 12-month increase since March 2021.
However, core inflation remains elevated at 5.3%.
Although many expect the Federal Reserve to lower interest rates eventually, Fed Chair Jerome Powell stated during a news conference on Wednesday that rate cuts would not be necessary for several years.
This statement contributed to the strengthening of the US dollar and weighed on Bitcoin.
The cautionary note from Goldman Sachs about the slower-than-anticipated decline in US inflation adds to the factors weighing on Bitcoin’s performance.
Uncertainty Looms as SEC Battles Binance and Ripple in Court
No significant cryptocurrency events occurred on Sunday, allowing investors to secure profits ahead of another busy week in the market.
However, Bitcoin (BTC) faced downward pressure due to investor concerns surrounding the SEC vs. Ripple lawsuit and the SEC’s actions against Binance, contributing to a negative sentiment.
Additionally, increasing expectations of interest rate hikes and hawkish comments from the Fed added to the bearish outlook.
The likelihood of a 25-basis point rate increase in July rose to 74.4% from 52.8% the previous week, as per the CME FedWatch Tool.
Meanwhile, uncertainty surrounding US regulatory matters and ongoing SEC actions continue to pose short-term obstacles for BTC, despite finding early support today.
JPMorgan Analyzes the Future of the US Dollar Amid China’s Rising Economic Power
China is projected to become the largest economy in the world by 2030, according to the Centre for Economics and Business Research (CEBR).
JPMorgan analysts suggest that even if China surpasses the US economy, the US dollar is unlikely to immediately lose its status as the world’s reserve currency based on historical evidence.
While China is seen as a potential contender, analysts believe that the US economic, technological, demographics, and geographical advantages make a displacement unlikely.
The euro and the Chinese yuan are considered significant threats to the dollar, with experts envisioning a transition to a multipolar reserve currency arrangement.
The recent strength of the US dollar has impacted Bitcoin’s price due to its negative correlation with the cryptocurrency.
The strengthening of the US dollar has exerted downward pressure on Bitcoin’s price. Let’s take a look at technical side of the market.
Bitcoin Price Prediction
From a technical perspective, the BTC/USD pair recently reached a 50% Fibonacci retracement at $26,610, accompanied by a tweezer top pattern on the daily timeframe.
This indicates a weakening bullish sentiment and suggests a potential price decline if the resistance level at $26,610 holds.
Moreover, the 50-day EMA and a downward trend line on the daily chart act as solid barriers, reinforcing the significance of the $26,610 level.
On the downside, Bitcoin may find support around the psychological level of $26,100, and a break below this level could lead to further selling pressure, potentially targeting the levels of $25,550 or $24,750.
Conversely, a breakout above $26,610 could fuel upward momentum, pushing the price toward the levels of $27,100 or $27,750.
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