Bitcoin price weakens due to new economic numbers

The macroeconomic landscape is becoming increasingly important to Bitcoin (BTC) price; We’ve seen this over the last 12 to 18 months during the US Federal Reserve’s aggressive rate campaign. They raised interest rates at breakneck speed to bring inflation under control. Currently, the US economy remains reasonably solid, while we are already experiencing a recession in Germany and China is also struggling with its ailing real estate sector.

America could be viewed as the only economic growth engine in the world right now. This is why the ISM Services PMI (the health indicator of the US services sector) was crucial for the Bitcoin price today.

The US Economy and Bitcoin

The US dollar is performing well against other fiat currencies due to high interest rates and the relatively strong US economy. Over the past few weeks, the world reserve currency has crawled out of a low and today the US Dollar Index (DXY) is up 0.14 percent.

With the rest of the world economies faltering while the US economy remains solid, the US dollar appears to have more room to continue this strong streak. While other central banks may need to step on the brakes completely, the Federal Reserve appears to have more leeway for tighter policy.

The solid US economy was reaffirmed today by the previously discussed ISM Services PMI (see chart above). A rating of 52.5 was expected, but in the end a rating of 54.5 was achieved.

For this indicator applies; The higher the better, and anything over 50 still indicates economic growth. This is good news for people who decide to buy US Treasury bonds, because in addition to the price gain, you also get interest on them; which is about 5 percent for short-term bonds.

What does this mean for the Bitcoin price?

The big question, of course, is what all this means for Bitcoin price. This development does not appear to be positive for the Bitcoin price in the short term. Why? Because the solid US economy means that the US Federal Reserve (Federal Reserve) can keep interest rates high for longer; so that inflation can fall further.

This higher interest rate initially makes it more attractive for investors to invest in US Treasuries and also slows down the economic slowdown. The aim of raising interest rates is to slow down economic growth so that inflation falls. This creates uncertainty in the financial world and times of uncertainty show that risky assets like bitcoin do not fare well.

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