Bitcoin
is
facing
significant
headwinds
as
the
US
Federal
Reserve
maintains
a
stringent
approach
to
controlling
inflation.
On
Tuesday,
July
2,
Federal
Reserve
Chairman
Jerome
Powell
conveyed
cautious
optimism
about
recent
inflation
data
but
reiterated
the
need
for
sustained
improvement
before
considering
rate
cuts.

The
recent
readings
suggest
the
market
is
back
on
a

disinflationary
path,
Powell
stated,
but
it
needs
to
see
sustained
progress
towards
the
2%
target.

The
Fed’s
primary
inflation
measure,
the
Personal
Consumption
Expenditures
(PCE)
price
index,
has
shown
a
decline,
rising
by
2.6%
over
the
past
year,
down
from
about
4%
a
year
ago.
However,
policymakers
believe
that
inflation
will
not
reach
the
Fed’s
2%
target
until
2026.
This
stance
signals
that

 

interest
rates
may
remain
elevated
for
a
prolonged
period,
potentially
reducing
liquidity
in
financial
markets.

This
environment
is
challenging
for
riskier
assets
like
Bitcoin,
which
tend
to
thrive
on
ample
liquidity
and
investor
enthusiasm.
With
tighter

monetary
conditions,
investors
are
more
likely
to
favor
safer
assets
such
as
government
bonds,
leaving
the
top
coin
with
less
support.
The
impact
of
these
macroeconomic
factors
on
Bitcoin
is
profound,
as
reduced
liquidity
generally
leads
to
lower
demand
for
high-risk
investments.

Miners
Feeling
The
Squeeze

Bitcoin
miners
are
facing
increased
pressure
as
operational
costs
rise.
These
miners,
responsible
for
verifying
transactions
and
maintaining
the
blockchain,
have
been
offloading
their
holdings
to
cover
expenses.
This
trend
of
selling
has
been
putting
additional
downward
pressure
on
BTC
prices.
As
prices
drop,
more
miners
are
compelled
to
sell
their
Bitcoin
to
maintain
profitability,
creating
a
cycle
of
selling
pressure.

Institutional
Investors
Take
A
Cautious
Stance

Institutional
interest
in
Bitcoin
seemed
to
have
cooled,
with
inflows
into

Bitcoin
ETFs
(Exchange
Traded
Funds)
slowing
significantly.
The
initial
excitement
around
these
investment
vehicles,
which
allow
institutions
to
gain
exposure
to
Bitcoin
without
directly
holding
the
asset,
has
waned.
This
reflects
a
more
cautious
stance
from
large
investors
who
are
wary
of
the
current
market
conditions.

 

BTC
down
in
the
last
24
hours.
Source:

Coingecko

What’s
Next
For
Bitcoin?

The
near-term
outlook
for
Bitcoin
remains
uncertain.
Analysts
suggest
that
the
price
could
experience
sideways
movement,
known
as
“going
nowhere
fast,”
or
even
decline
to
the
$54,000
mark.
Investors
are
closely
monitoring
the
Federal
Reserve’s
actions,
hoping
for
signs
of
a
shift
in
monetary
policy
that
could
provide
some
relief
to
the
cryptocurrency
market.

At
present,
investors
are
focused
on
defending
the
$60,000
support
level.
However,
continued
selling
pressure
from
miners
and
other
market
participants
could
push
Bitcoin’s
price
down
further.
The
market
is
on
edge,
waiting
to
see
how
these
various
factors
play
out
and
whether
Bitcoin
can
maintain
its
current
levels
or
face
further
declines.

Featured
image
from
Pexels,
chart
from
TradingView

Go to Source
Author: Christian Encila

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