Bitcoin briefly flirted with the $72,000 resistance on June 7, but its intraday gains quickly evaporated, sending the cryptocurrency down to $69,000. More concerningly, two indicators, including exchanges’ top traders’ long-to-short metric, suggest that Bitcoin (BTC) investors are becoming less optimistic. Is the Bitcoin bull market over, at least for the short term?
Bitcoin and gold traded down amid the S&P 500 all-time high
The S&P 500 index reached a new intraday all-time high on June 7 after the United States reported a 272,000 increase in nonfarm payroll jobs in May, significantly surpassing the previous month’s figure of 165,000 jobs. A strong labor market is generally beneficial for credit and consumption and, thus, for publically listed companies. People are more likely to spend when the job market is resilient, regardless of the cost of capital.
The relationship between job creation and corporate earnings is particularly favorable, especially since the U.S. Bureau of Labor Statistics reported that wages increased by 0.4% in May from the previous month, with the participation of prime-age workers, ages 25–54, reaching its highest level in 22 years at 83.6%. Despite the decline in consumer sector U.S. stocks on June 7, the tech sector more than compensated for the move.
Robert Sockin, Citi’s senior global economist, noted that the longer the U.S. Federal Reserve keeps interest rates above 5.25%, the higher the risk of a recession, as reported by Yahoo Finance. However, there is no indication of an imminent risk based on the most recent U.S. unemployment data, which stands at 4%. According to the CME FedWatch Tool, investors are currently pricing in a 51% chance that the Fed will cut rates by September, down from 69% the day before.
Bitcoin was not the only asset class negatively impacted by the macroeconomic data and investors’ reduced expectations of interest rate cuts. Gold plummeted to $2,300 after flirting with $2,390 in the early hours of June 7. Similarly, the U.S. Treasury two-year yield jumped from 4.74% to 4.87% during the same period, indicating that traders are dumping their…
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