The world's leading cryptocurrency faces challenges as the US economy shows mixed signals and the elections create uncertainty.
Bitcoin experienced a 2.49% decline on Thursday, trading at $70,544.01, after failing to break above its March all-time high. The cryptocurrency lost the support of $72,000, which now becomes resistance in an overbought zone. Bitcoin would be reacting negatively to a still resilient economy and the US elections.
Bitcoin experienced a 2.49% pullback on Thursday, trading at $70,544.01 / TradingView
US Economy, Elections and Their Impact on Bitcoin
Recent US economic data paints a mixed picture on the country's economic health. The Personal Consumption Expenditure (PCE) Price Index showed a moderation in underlying inflation. This suggests that the Federal Reserve's monetary policies are starting to take effect. The annual index remained at 2.7%, while the monthly index was 0.3%, both in line with expectations.
On the other hand, the labor market showed resilience. Initial jobless claims stood at 216,000, below expectations, and continuing claims remained at 1.862 million, indicating a tight labor market. However, the Labor Cost Index suggests that wage pressures persist, albeit at a moderate pace.
Bitcoin and electoral uncertainty
Another factor putting pressure on Bitcoin is the electoral uncertainty in the United States. Polls reveal a technical tie, and reports of irregularities with the first votes cast are emerging. This situation adds volatility to the market, affecting investor confidence in risk assets such as cryptocurrencies.
Market Outlook: What to Expect?
The data suggests that the Federal Reserve could take a more dovish approach to its rate policy, which could weaken the dollar in the medium term. However, the strength of the labor market and consumer spending could provide some support to the dollar. Despite the recent drop, Bitcoin maintains impressive gains over the past 12 months, with returns exceeding 103%.
Disclaimer: Cryptocurrency investing is not regulated and may not be suitable for all investors. It is possible to lose the entire amount invested.
Upvoted! Thank you for supporting witness @jswit.
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit