Bitcoin’s (BTC) price flirted with the $72,000 resistance level on June 7 before dropping to $69,000 as intraday gains fizzled out. Alarmingly, two key indicators, including exchanges’ top traders long-to-short ratio, suggest that Bitcoin investors are losing confidence. Is the Bitcoin bull market coming to an end, at least in the short term?
Bitcoin and gold both experienced a decline as the S&P 500 index hit a new all-time high on June 7 following a strong jobs report in the United States. The rise in nonfarm payroll jobs by 272,000 in May, exceeding the previous month’s figure of 165,000, is seen as positive for credit, consumption, and listed companies. A robust labor market typically leads to increased spending by consumers, regardless of the cost of borrowing.
The correlation between job creation and corporate earnings is particularly strong, with wages rising by 0.4% in May and prime-age worker participation hitting a 22-year high. Despite a drop in consumer sector stocks, the tech sector compensated for the losses, highlighting the resilience of the market.
Citi’s senior global economist, Robert Sockin, warned that keeping interest rates above 5.25% for an extended period could increase the risk of a recession. However, current U.S. unemployment data suggests no immediate danger, with a 4% unemployment rate. Investors are now pricing in a 51% chance of a rate cut by the Fed in September, down from 69% previously.
Bitcoin, gold, and the U.S. Treasury two-year yield were all impacted by the macroeconomic data and decreased expectations of interest rate cuts. While it may seem perplexing that Bitcoin followed the downward trend of gold and fixed-income, it is essential to consider the vast cash reserves held by major U.S. companies, providing a cushion against market fluctuations.
Recent data from BTC futures markets indicates a decline in bullish sentiment among top traders after Bitcoin’s rejection at the $72,000 resistance level. The long-to-short ratio at major exchanges like Binance and OKX has shifted towards a more bearish stance, raising concerns about the future of the market. However, retail trader demand for stablecoins in China has shown a slight increase, suggesting that panic selling is not widespread.
In conclusion, while there are signs of wavering confidence in the Bitcoin market, there are also indicators of resilience. The $69,000 support level will be crucial in determining the future direction of Bitcoin prices. This article serves as general information and should not be construed as investment advice. The opinions expressed here are solely those of the author and do not necessarily reflect those of Cointelegraph.