Market Wrap: Bitcoin Falls As Traders Wait For June CPI Inflation Report
Bitcoin was down on Monday, falling along with most digital assets, as traders waited for a key U.S. inflation report due to be released early Tuesday.
The largest cryptocurrency by market cap stood above price support at $ 32,000, with $ 36,400 seen as the target on the upside. Over the past seven weeks, bitcoin has mostly stayed in a range of between $ 30,000 and $ 40,000.
- S&P 500: 4,384.6, + 0.34%
- Gold: $ 1,806.2, -0.25%
- The 10-year Treasury yield closed at 1.369%, down from 1.36% on Friday
“It is starting to look like the calm before the storm as quiet, silent activity emerges through point, derivative and chain metrics,” blockchain analytics firm Glassnode wrote in a report on Monday.
US CPI report for June could rekindle inflation fears
Many cryptocurrency investors see bitcoin as a potential hedge against inflation, so Tuesday’s release of the June Consumer Price Index by the US Department of Labor’s Bureau of Labor Statistics should provide a point. key data.
The previous month’s report showed a 5% jump in the All-items index, the fastest since 2008, due to rising prices for used cars and trucks.
On average, analysts expect a reading of 4.9% for June, but any acceleration could rekindle speculation that the Federal Reserve may need to slow its efforts to stimulate the economy. The US central bank has nearly doubled the size of its balance sheet since early 2020 to over $ 8 trillion, and coinage printing has been seen as a catalyst for bitcoin’s price gains since then.
“The benchmark crypto has a strong price base, given that we are unlikely to see a reversal in the downgrade race,” Bloomberg Intelligence analyst Mike McGlone wrote in a report on Monday. . “When measuring the value of an individual currency, the dollar, for example, can strengthen or weaken against a basket of similar legal tender. However, it is the entire fiat currency market that is in decline.
There is speculation that faster inflation in areas where the economy heats up, like airline tickets and accommodation, could spread to enduring categories like rents.
“So far, this has hardly happened, supporting the Fed’s narrative that such inflationary pressures are transient,” Deutsche Bank analysts wrote in a July 9 report.
Consumers are apparently starting to believe that higher prices could be the new normal: investigation Released Monday by the Federal Reserve Bank of New York, consumers on average expect prices to rise 4.8% in the coming year, down from 4% a month earlier.
Of course, it goes without saying that there are many different ways of measuring rising consumer prices, and the CPI might not provide the most accurate picture.
Crypto Markets Meet Wall Street Summer
It’s summer in the northern hemisphere, and that could explain why the cryptocurrency markets have been so sluggish lately.
Glassnode described the bitcoin market as “incredibly quiet”.
Trading volumes in the biggest cryptocurrency have been trending down, and digital asset firm Eqonex speculates that could be, at least in part, because Wall Streeters who have recently entered crypto -coins make, well, a break.
According to the firm’s daily newsletter on Monday, “2020 and 2021 marked the arrival of financial institutions in the crypto space. We celebrated, we applauded. But we forgot one thing: the people who work at these financial giants love summer vacation.
Lockdowns linked to last year’s coronavirus could play a role. Now that vaccines are rolling out and more people can get out and travel, some traders might jump at the chance to escape – and make up for lost time.
“Bitcoin can be traded 24/7, but traders cannot,” writes Eqonex. “Especially those with houses by the lake.”
Bitcoin vs stocks
Bitcoin’s sluggishness comes as US stocks once again climbed to another absolute record. As 2021 sinks into its second half, some analysts may start to assess their track record. The price of Bitcoin is notoriously volatile, so naturally the question arises as to whether the reward justifies the risk.
The Standard & Poor’s 500 index was led higher on Monday by financial and real estate stocks, with banks such as JPMorgan and Goldman Sachs is preparing to publish its quarterly results from Tuesday on.
“The most important things on people’s minds right now are the start of the earnings season and the economic releases on the inflation front,” Eric Freedman, chief investment officer at US Bank, told Bloomberg News. Asset Management Group. The 10-year US Treasury yield rose 0.01 percentage point to 1.37%.
At some point earlier this year, bitcoin had doubled from its price at the end of 2020. But the recent drop in the cryptocurrency has reduced the gain since the start of the year to 14%. Such a performance is lower than the 17% increase in the S&P 500.
Such a track record is essential because, despite frequent warnings that past performance is no guarantee of future success, many investors are allocating money to assets whose prices have recently risen. Fear of running out was a powerful driver for bitcoin in 2020, but at the moment it doesn’t look like there is much to worry about.
Capital outflow in digital asset investment funds
Investment funds in digital assets posted a net outflow of $ 4 million for the week ending July 9, reversing a net inflow of $ 63 million for the previous week. The volume of transactions in bitcoin, the largest cryptocurrency, has fallen to $ 1.58 billion, the lowest since October 2020.
For the week ended July 9, bitcoin-focused funds recorded a capital outflow of $ 7 million, according to a report by digital asset manager CoinShares. The price of the cryptocurrency has consolidated in a narrow range of $ 32,000 to $ 35,000.
Over the past few weeks, North American bitcoin funds have seen steady inflows while their European counterparts have continued to see outflows, indicating “a geographic divergence in sentiment at the moment,” according to CoinShares.
Last week Ethererum, Binance and Cardano posted minor entries, while the largest entries went to multi-asset investment funds with $ 1.2 million.
Altcoin balance sheet
- SNX overvoltage: The price of SNX, the native token of the Synthetix Decentralized Finance Protocol (DeFi), hit monthlong highs above $ 13 earlier today. DeFi token gained 75% this month, while bitcoin is down 2%. SNX allows market participants to trade Ethereum-based synthetic contracts linked to traditional financial assets including crude oil as well as stocks like Apple, Tesla, Facebook, Google and Coinbase. SNX’s move to four-week highs comes as the protocol prepares to launch its long-awaited exchange powered by Optimistic Ethereum, an Ethereum Layer 2 scaling solution aimed at increasing transaction throughput and reduce costs.
- Migration of Power Ledger: Australia-based blockchain company Power Ledger will migrate to Solana from Ethereum in search of higher speed and scalability. The company also cited the decline in power output from Solana’s Proof of History (POH) and Proof of Stake (POS) mechanisms in an announcement on Monday.
- Polygon supports Esports tournaments: Polygon is spending $ 10,000 to build excitement on the Community Gaming esports platform. The partnership will begin with a series of summer tournaments sponsored by Polygon. Players of SkyWeaver, a free non-fungible token (NFT) trading card game from Horizon Blockchain Games, will compete for $ 2,500 in MATIC tokens.
Most digital assets on CoinDesk 20 ended lower on Monday.
Notable Winners at 9:00 p.m. UTC (4:00 p.m. ET):