Major Bitcoin Price Swings Might Happen In July As Traders Focus On US Economy
Volatile trading for Bitcoin (BTC) might be on the cards this month as uncertainties over US Fed policy, economic activity, and inflation dominate the economic climate.
Analysts say Bitcoin could be in for a rocky start in July as traders and investors consider the divine US economic activity amid a climate of consistent inflation and a stock market rally powered by Big Tech.
US real gross domestic product (GDP) spiked to an annual rate of 1.4% in the first quarter of 2024, based on the third estimate published by the Bureau of Economic Analysis.
June 27’s data contrast sharply with 2023’s fourth-quarter results, which showed US economic activity had surged by 3.4%.
Data published by the bureau also indicated that May’s personal consumption expenditures index, a major inflation indicator, has dropped to a 2.6% year-over-year increase, a drop from April’s 2.7%.
Jag Kooner, the head of derivatives at Bitfinex told reporters that the slowdown indicates possible economic cooling. He added:
“Looking ahead to July, market participants should watch for a comeback in volatility as additional regulatory developments and macroeconomic policies will play a crucial role.”
In cryptos, this might help increase interest in Bitcoin and other digital assets as alternative investments if traditional markets show some signs of weakening, as explained by Kooner.
A slowing economy might also spur the US Federal Reserve to start cutting rates this year. The Fed has insisted on maintaining high interest rates aiming to manage price stability and prevent any economic overheating.
Cheaper borrowing at lower rates might flow to risk assets, including Bitcoin, according to analysts. Kooner added:
“Historical trends indicate that during economic slowdowns, investors often turn to Bitcoin as a store of value.”
More clues on Fed policy are expected at the next Federal Open Market Committee (FOMC) meeting, scheduled for July 30-31. In the meantime, futures traders are pricing in up to two rate cuts, expected to happen sometime in the last quarter of 2024.
While some are expecting increased volatility for July, others are still doubtful.
The head of research at crypto fund manager DigitalX, Pratik Kala, said that July will be a time of consolidation and low volatility. Pratik added:
“Bitcoin is looking for the next major catalyst for a move up. None is on the horizon, but this is expected to change as we near the U.S. elections.”
Seasonality matters as well. The third quarter is believed to be a period of low volatility as most of the notable US decision-makers are normally on holiday, Kala highlighted.
The world’s biggest crypto spiked to its highest level in a week on June 30, reaching $63,700, based on CoinGecko data. Currently, Bitcoin is down 14% from its March all-time high of $73,800.
Bitcoin Has Been On A Comeback In 2024
Rising from the ashes to the sky, Bitcoin seems to be set for gains in the second half of 2024. The first half of 2024 saw the most volatile asset class, cryptocurrency, experience a significant comeback-worthy story after it went through its most vulnerable state.
In January 2023, Bitcoin dropped to around $16,000. A year later, it surged to $40,000. Bitcoin peaked at $73,000 in March 2024 and now trades above $62,000.
The remarkable trajectory – exploding from the ashes and hitting new heights – has introduced a considerable transformation in the image and perception of crypto. The paradigm shift is owed to the market, the criminal convictions of several corrupt crypto billionaires, and its newfound relevance in politics.
As 2024 progressed, crypto became more macro and incorporated into the mainstream as inflation cooled down, tech stocks moved and the crypto market also followed since both sectors are tech-savvy and youth-oriented.
Additionally, the correlation between Bitcoin and the S&P 500 intensified, meaning that the stock and crypto markets are moving concurrently. The intersection of crypto with traditional financial markets will continue growing in the second half of the year.
One of the notable milestones in Bitcoin’s history was the SEC’s approval of spot Bitcoin and spot Ether exchange-traded funds (ETFs) in 2024. The approval showed that the authorities recognized Bitcoin as a legal and legitimate financial product with long-term growth potential. The entry of financial giants such as Fidelity and BlackRock into the crypto space has boosted the suggestion that crypto is the future of finance.
Financial institutions are now working on the tokenization of funds, and they no longer consider blockchain a threat, instead, it is a tool.
Bitcoin’s Bust Turned Into A Boom
Bitcoin and other cryptos endured a persistent crypto winter after the collapse of the infamous crypto billionaire Sam Bankman-Fried’s FTX in 2022. Nevertheless, in 2024, the crypto space has enjoyed brighter days, mainly due to the SEC’s approval to spot Bitcoin ETFs and Ether ETFs.
In January, Bitcoin was trading at about $40,000, and within two months, it gained over 50%, hitting a peak of $73,737 in March. Furthermore, the successful Bitcoin halving, a technical event that cuts Bitcoin mining rewards in half, also had a positive effect on investors.
Investors kept pouring funds heavily into spot Bitcoin ETFs, which considerably contributed to the surge in Bitcoin and the crypto sector in general. This trend will not slow down anytime soon, and maybe that is why crypto experts are confident when saying Bitcoin might hit $100,000 later this year.
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