tl;dr
Bitcoin and ether are trading lower as Asia begins its business week, with mixed bullish and bearish market signals. The crypto markets are in the red amid renewed fears of U.S. stagflation, impacting risk assets. Bitcoin is trading near $62,400, down 2.5% in 24 hours, while Ether is 3% lower at $3,...
Bitcoin and ether are trading lower as Asia begins its business week, with mixed bullish and bearish market signals. The crypto markets are in the red amid renewed fears of U.S. stagflation, impacting risk assets. Bitcoin is trading near $62,400, down 2.5% in 24 hours, while Ether is 3% lower at $3,200. The CoinDesk 20 is down 2.6% at 2,197 points.
The threat of stagflation, slower economic growth, and persistent inflation is influencing market sentiment. U.S. GDP grew at 1.6% in Q1, and the PCE index showed a 3.4% annualized inflation rate. Traders on Polymarket still see no rate cuts as the most likely scenario but the chance of 1 rate cut is increasing. Janet Yellen's fiscal strategy and the impending U.S. Treasury's quarterly refunding announcement are key factors impacting market stability and growth.
The launch of bitcoin exchange-traded funds in Hong Kong on April 30 is notable, but news that mainland Chinese investors won't be able to trade the ETFs has tempered bullishness.
The market appears to be on a precipice right now as it debates which direction to take, with significant bullish and bearish narratives on the horizon. The threat of stagflation – a period of high inflation and low growth – is very real, impacting market sentiments.
Last week's U.S. GDP report showed the world's largest economy grew at an annualized rate of 1.6% in the first quarter of this year following the preceding quarter's 3.4% growth. Meanwhile, the personal consumption expenditures price (PCE) index showed prices rose to a 3.4% annualized rate in the first three months of the year from 1.8% in the final quarter of 2023.
Most traders on the prediction market platform Polymarket still see no rate cuts as the most likely scenario, with a 35% chance of this happening, but the chance of 1 rate cut is creeping up, now at 29% versus 26% a week ago and 14% at the start of the month.
Janet Yellen's fiscal strategy, leveraging the Treasury General Account (TGA) and the Reverse Repurchase Program (RRP), could inject up to $1.4 trillion in liquidity into the financial system, influencing risk assets.
The key to a continuing bitcoin bull market is the U.S. Treasury's impending quarterly refunding announcement, which maintains or reduces the current TGA balance of $750 billion. The launch of bitcoin exchange-traded funds in Hong Kong on April 30 has drawn attention, but news that mainland Chinese investors won't be able to trade the ETFs has reduced the initial bullishness.
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