- Bitcoin hit 2-month low on expectations of slower rate cuts
- But the dovish Fed meet boosted BTC et al
- Hong Kong listed spot ETFs launch fizzles
Cryptocurrencies have faced some familiar volatility to the downside lately, especially following the successful completion of the fourth halving event, a lifetime ago on April 19.
In fact, the year so far has been full of wonders, proofs of purchase and encouragement for the true believers.
However, according to XM Australia’s CEO Peter McGuire, traders are grasping at something to feel good about in the near-term, and there’s not a lot out there.
“Both the launch of spot-Bitcoin ETFs and halving event are now behind us, it seems that there is nothing positive left for crypto investors to price in.”
Therefore, Pete says, Bitcoin’s faith lies largely on the Fed’s interest rate trajectory, where the recurring upside surprises in inflation data have shifted expectations from six rate cuts in the beginning of the year to a little less than two at the moment of writing.
“Earlier in the week, market pricing implied even less basis points worth of rate cuts from the Fed in 2024, but Wednesday’s dovish FOMC meeting put the probability of at least one 25 basis point cut back on the table.
“This repricing was enough to help Bitcoin recoup some losses, given that it had fallen to a fresh two-month low of $56,483 ahead of the FOMC meeting. Meanwhile, Bitcoin has also benefited from the latest advance in the stock market driven by Apple’s announcement of a massive share buyback program.”
On Friday, stocks in the US surged on Friday, egged-on by the Goldilocksian-weaker-than-expected April jobs report, which pushed expectations for a Federal Reserve interest rate cut to September from November.
The S&P 500 gained 1.2%, the Nasdaq advanced 2% and the Dow Jones closed 450 points higher.
That also helped crypto find some breathing space with both BTC and Ether rising sharply (by day’s end).
Hong Kong listed ETFs disappoint
On Tuesday, six spot Bitcoin and Ethereum ETFs made their debut in Hong Kong amid heightened anticipation of a renewed wave of demand from Asian investors.
Peter told Stockhead that Asia’s first spot Bitcoin and ether exchange-traded funds, managed by China Asset Management (ChinaAMC), Harvest Global and Bosera/HashKey, were widely considered to have a disappointing debut on the Hong Kong Stock Exchange.
“The six new spot Bitcoin and Ether ETFs — one Bitcoin and one Ether ETF per issuer — recorded a combined $11.2 million in trading volume on Tuesday, according to Hong Kong Stock Exchange data, led by ChinaAMC’s spot bitcoin ETF.”
Pete says the launch of those vehicles proved to be unsuccessful as they did not manage to accumulate the expected inflows.
The numbers certainly pale in comparison to the US$4.5 billion first-day volume for the spot Bitcoin ETFs launched in the US in January.
A day later, BlackRock reported its first outflow since the initiation of its spot Bitcoin ETF, corroborating that demand for such investment vehicles has been fading.
“Moving forward, markets are focused on the approval of spot-Ethereum ETFs as it is considered to be the next growth driver,” McGuire says.
Technical levels to watch
Pete says the BTCUSD has come under significant selling pressure after its rejection at the 50-day simple moving average (SMA).
“Although the price posted a fresh two-month low of $56,483, it managed to recoup some losses on the back of the dovish FOMC meeting.”
Peter reckons, should the rebound extend above the $60,000 psychological mark, the price may test $64,500, a region that acted both as support and resistance in recent months. Even higher, the April resistance of $67,270 could come under scrutiny.
“Alternatively, if the bears re-emerge and push the price lower, initial support could be found at the recent two-month low of $56,483. In case of a downside violation there is no prominent support until the February resistance zone of $52,850.”