The Impact of Macroeconomic Conditions on the Bitcoin Price
Introduction
In recent days, the price of Bitcoin experienced a significant surge following Grayscale’s victory in the ETF lawsuit against the US Securities and Exchange Commission (SEC). However, the gains have been short-lived as the price has now fallen back to $26,000, with the SEC delaying its decision on multiple ETF applications until October. This indicates a bearish sentiment in the market, which is likely influenced by the current macroeconomic situation.
Bitcoin and the Economic Conditions
One of the key questions at the moment is whether the Federal Reserve has concluded its interest rate campaign. Currently, the market estimates a 7 percent chance of another rate hike in September. The final decision will depend on the inflation data for this month and the future developments in the US labor market.
The upcoming inflation data, scheduled for September 13th, will be crucial in determining the Fed’s next move. Additionally, it was reported that US unemployment rose from 3.5 to 3.8 percent, contrary to the expected 3.5 percent.
While the unemployment rate remains relatively low, this slight increase is noteworthy. It is evident that inflation levels are persistently high, which means elevated interest rates are likely to remain unless a severe recession occurs and the Federal Reserve abruptly adjusts its course by lowering rates.
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Implications for the Bitcoin Price
These developments imply that the macroeconomic pressure on the Bitcoin price is likely to persist. As long as the US economy remains robust in the coming months, interest rates will stay elevated, which is a negative factor for Bitcoin’s price.
Typically, Bitcoin’s price is not positively affected by a change in Federal Reserve policy unless a recession occurs. Therefore, the current situation presents a challenging scenario for the Bitcoin market, as evident in its price movements.
There seems to be little at the moment that could definitively boost the Bitcoin price and turn the momentum positive.
We are now eagerly awaiting the final approval of the Spot Bitcoin ETF and possibly the next halving event planned for April 2024. Patience is crucial in the current circumstances.