On Tuesday, July 2, Federal Reserve Chairman Jerome Powell expressed slight satisfaction with the progress of inflation, but stated that he still lacks confidence in continuing to cut interest rates. The price of Bitcoin has come under selling pressure in the past 24 hours, falling by 3.63% as of the time of writing, dropping to the level of $60,700.
Uncertainty about Interest Rate Cuts by the Federal Reserve Chairman
On Tuesday, Jerome Powell stated that the central bank has made significant progress in reducing inflation compared to last year. Powell said, "The last (inflation) data and the previous one (to a lesser extent) indicate that we are returning to the path of deflation."
However, he added that they need to be more certain that, according to U.S. PPI data, the inflation rate is continuing to move towards the Federal Reserve's target of below 2%. Only then will the Federal Reserve initiate the process of easing monetary policy.
As of May, the U.S. Department of Commerce's Personal Consumption Expenditures (PCE) price index (the Federal Reserve's main inflation gauge) has risen by 2.6% over the past 12 months. This number has steadily decreased compared to about 4% a year ago. However, policymakers expect that it will not reach the Federal Reserve's 2% target until 2026.
This means that the Federal Reserve may maintain interest rates for a longer period than expected. Therefore, the lack of liquidity may bring further selling pressure to risk assets such as stocks and cryptocurrencies.
According to CoinGape, Bitcoin miners have been selling a large amount of their BTC and will continue to sell to meet their operating expenses.
What is the Outlook for Bitcoin?
One of the major concerns for Bitcoin recently is the selling by Mt. Gox creditors, who finally received BTC after waiting for ten years. Top market participants such as JPMorgan have predicted that Bitcoin will experience volatility this week.
On the other hand, enthusiasm for spot Bitcoin ETFs is waning, with a significant decrease in inflows compared to the first quarter. This indicates that institutional investors are cautious about further investment in this asset class.
The tight liquidity situation in Bitcoin's history has never been seen before. Therefore, if the Federal Reserve refuses to change course in the short term, it can be expected that BTC will consolidate. Currently, investors are trying to defend the support level of $60,000. However, further selling pressure from Bitcoin miners may push the BTC price up to $54,000.
Could the altcoin season start with a tenfold increase in the next 5 weeks?
The cryptocurrency market value has fallen by nearly 3% in the past 24 hours, hovering around $2.37 trillion in the early European session on Wednesday. After five consecutive days of small cash inflows, the U.S. spot Bitcoin ETF saw a net outflow of about $14 million on Tuesday.
As a result, the price of Bitcoin (BTC) has led the altcoin industry into a downward trend, triggering forced liquidation of over $120 million in leveraged crypto trades.
Has the cryptocurrency bull market cycle ended?
The cryptocurrency industry is currently in a macro bull market cycle, which officially began after the fourth halving in April. The approval of spot Bitcoin and Ethereum ETFs in the United States, Hong Kong, and Thailand is an additional bullish catalyst.
Therefore, most analysts have compared the cryptocurrency bull market in 2024 to the cycle characterized by major retail investor adoption in 2017.
Furthermore, even before the fourth halving event, the price of Bitcoin reached a historic high of about $73,000, marking the beginning of a super cycle.
Based on all available data, it can be safely assumed that the cryptocurrency bull market cycle in 2024 has not ended.
What's next?
According to a well-known cryptocurrency analyst named Moustache on the X platform (@elcryptoprof), the cryptocurrency industry has entered a phase of re-accumulation after successfully breaking through the bull market wave in the first half of the year. Therefore, this cryptocurrency analyst believes that the frenzy stage of the cryptocurrency bull market will begin in the next five weeks.
This cryptocurrency analyst compared the breakthroughs of the cryptocurrency bull market in 2016 and 2020, forming a similar fractal pattern. Ultimately, the reversal of Bitcoin dominance will trigger the parabolic phase of the altcoin bull market cycle.
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