Earlier this week, Bitcoin skyrocketed after Grayscale’s victory in the ETF lawsuit against the US Securities and Exchange Commission was announced. That full rise has now been reversed and the price is back around $26,000 after the SEC delayed its decision on several ETF filings until October last night.
This is a clear signal to the market that the overall sentiment is bearish, which is likely related to the macroeconomic situation.
Bitcoin and the Economic Conditions
The big question as to whether now is the right time is whether the US Federal Reserve (Federal Reserve) is done with its interest rate campaign. In principle, this appears to be the case as the market currently estimates the probability that we will see a final rate hike in September at 7 percent. On this question, much will depend on the upcoming inflation data for this month and of course on the further development of the US labor market.
The next inflation dates are scheduled for September 13th, so this will be an important date to watch. In addition, it was announced today that the US unemployment rate rose to 3.8 percent from 3.5 percent; a result of 3.5 percent was again expected.
Unemployment is thus still at a relatively low level, but the first increase has started. The fact is that inflation is still too high and we will probably have to deal with these higher interest rates for a relatively long time; unless there is a severe recession and the Federal Reserve suddenly has to change course (cut interest rates).
What does this mean for the Bitcoin price?
For the Bitcoin price, these developments mean that macroeconomic pressures will not disappear for the time being. If the US economy continues to be solid in the coming months, interest rates will remain at these elevated levels; which has a negative impact on the bitcoin price.
The only reason the Federal Reserve will change course is because of a recession, and that’s not generally positive for bitcoin either. We are currently in a difficult position in this regard and this is clearly reflected in the performance of the share price.
At the moment, there seems little that could give bitcoin price a decisive boost to turn momentum back into positive territory.
With that in mind, one is really awaiting final approval of the Spot Bitcoin ETF and possibly the next halving which is scheduled for April 2024. Patience is a virtue at this point…