Bitcoin’s price dropped by 5.6% on June 18, falling to $64,300, marking its lowest point in over a month. This decline came amidst a six-day downward trend fueled by signs of a slowdown in the U.S. economy, particularly in retail sales and employment data. Despite the U.S. Federal Reserve maintaining interest rates at their highest levels in 20 years, the derivatives markets show signs of resilience, hinting at a potential recovery in Bitcoin’s price.
The sluggish U.S. economy was evident in a mere 0.1% increase in retail sales compared to economists’ expectations of 0.3%, as reported by Yahoo Finance. While some experts like Paul Ashworth from Capital Economics view this data as indicative of a lackluster second-quarter GDP, others like Matthew Luzzetti from Deutsche Bank believe that consumption is gradually returning to normal levels. Federal Reserve Bank of New York President John Williams expressed confidence in the U.S. economy and labor market, predicting a decrease in inflation in the latter half of the year. Williams suggested that the Fed would need more data before considering a rate cut.
The high-interest rate environment has favored traditional fixed-income investments, posing a challenge to Bitcoin. Additionally, the S&P 500 index reaching an all-time high on June 18, driven mainly by a few tech companies, has diverted investor interest away from Bitcoin. Furthermore, U.S. spot Bitcoin exchange-traded funds (ETFs) saw a significant $562 million outflow in just three days, according to Farside Investors’ data.
One way to gauge market sentiment is by analyzing the long-to-short ratio of top traders across perpetual and quarterly futures contracts. Binance’s top traders saw an increase in their long-to-short ratio, indicating a preference for leveraged long positions despite Bitcoin’s struggles to maintain the $68,000 support level. Similarly, OKX’s top traders also showed a rise in their long-to-short ratio, suggesting a bullish sentiment despite Bitcoin’s price dropping below $67,000.
Aside from ETFs and derivatives traders, Bitcoin miners play a crucial role in the market. By monitoring their outflow, analysts can better understand traders’ sentiment. Glassnode’s Miner Outflows Multiple has decreased since June 14, indicating reduced sell pressure from miners. This contrasts with the period between May 30 and June 13 when miners were selling more than the average of the previous 365 days.
With derivatives traders maintaining a bullish stance during Bitcoin’s drop to $64,300 on June 18 and spot ETFs experiencing outflows, there is no immediate reason to expect further downward pressure on Bitcoin’s price. The current macroeconomic landscape points towards a potential rate cut by the Fed by the end of the year, which could positively impact Bitcoin’s price.
This article serves as general information and should not be considered legal or investment advice. The opinions expressed are solely those of the author and do not necessarily reflect the views of Cointelegraph.