Bitcoin’s price movement remains uncertain as it hovered below the $66,000 mark late Wednesday during U.S. trading hours, despite experiencing minor rallies that faced swift selling pressure. With the price standing at $65,800, the broader crypto market also felt the impact, particularly with significant drops in bitcoin cash (BCH) and litecoin (LTC), leading to a 0.7% decrease in the CoinDesk 20 Index.
ETF Flows and Macro Drivers
The anticipation around new spot ETFs, which had previously driven interest, has seen a dampened flow, shifting focus back to macroeconomic factors as potential drivers for bitcoin’s price direction. This shift comes after a notable rally from mid-February to mid-March, supported by significant inflows into the spot ETFs. However, recent trends indicate a slowdown in these inflows, particularly against the backdrop of continued sales from Grayscale’s GBTC, sometimes resulting in net negative flows for the group.
Economic Indicators and Federal Reserve’s Stance
The economic landscape presents a mixed picture, with inflation rates ticking up in early 2024 despite a previous downward trend throughout 2023. With inflation at 3.2% year-over-year in February, surpassing the Federal Reserve’s 2% target, and continued job growth, the initial hopes for a more accommodative monetary policy seem to be waning.
Federal Reserve Chairman Jerome Powell’s recent remarks underscored an expectation for rate cuts within the year, even as inflation and economic growth remain robust. This statement, coupled with a weaker-than-expected report on the U.S. service industry’s growth in March, prompted brief rallies in bitcoin’s price.
Looking Ahead: Nonfarm Payrolls Report
Investors are now turning their attention to the upcoming Nonfarm Payrolls report due Friday, with expectations set for 200,000 job additions. This report follows ADP’s announcement of a stronger-than-expected private payroll growth in March, further complicating the macroeconomic outlook.
As the market navigates through these uncertain economic times, the impact on risk assets like bitcoin becomes more pronounced, influenced by factors such as the rising U.S. 10-year Treasury yield and a strengthening U.S. dollar. The unfolding economic indicators and policy decisions in the coming days will likely play a crucial role in determining the direction of bitcoin’s price movement.
