At the time of writing, Bitcoin is trading for $51,823.78. That’s a modest 0.3% gain since this time yesterday and virtually flat compared to last week, according to CoinGecko data.
Both Bitcoin and Ethereum have shown signs of traders taking profits and waiting to see how the market fares after the U.S. reports initial jobless claims and existing house sales.
Investors have been keenly focused on economic indicators as they try to predict when the Federal Reserve might finally lower interest rates in 2024. So far, hints dropped by members of the FOMC have not been optimistic.
“There is plenty of time, I think, for us to get more confidence in where the economy is heading,” Federal Reserve Gov. Michelle Bowman said during a D.C. banking event yesterday. “I think it will be time at some point to begin the process of lowering rates, but given the uncertainty in the data, I am just not confident … well, it’s certainly not now.”
Investors heard her loud and clear.
With 27 days to go until the next Federal Open Market Committee meeting, only about 5% of investors think it’s likely that the committee will lower rates in March, according to the CME FedWatch tool. Data now indicates 54% of traders think the Fed will lower rates in June.
Generally speaking, digital assets and stocks are considered “risk on” assets. Investors tend to give risky assets a bigger footprint in their portfolios when federal interest rates are low. But U.S. federal interest rates risen sharply from 0.25% – 0.50% in March 2022. They reached 5.25% – 5.50% in July 2023 and have yet to be lowered.
Meanwhile, Yuya Hasegawa, a crypto analyst at Bitbank in Japan, has been watching daily flows in and out of U.S. Bitcoin ETFs for signs of how traders are faring. He noted that flows have fallen sharply from last week, from about $300 million per day to $135 million.
“Nevertheless, it is still approximately three times the amount of what the Bitcoin network supplies in a day, and it does not indicate that the selling pressure from the ETFs is greater than the demand,” he wrote. “A recovery in the U.S. equity market could lift up the price of bitcoin within a current range, but $53k will likely be a tough resistance to break.”
To that end, there’s good news: After an especially strong Q4 earnings report from Nvidia yesterday seems to have buoyed equities. Most major U.S. stock indices ended the day in the green.
