Bitcoin Sees Decline as Fed Rate Cut Expectations Waver
Bitcoin (BTC) experienced a 1.22% decline on Sunday, temporarily wiping out the 1.06% gain from the previous day. Despite this setback, BTC saw a weekly increase of 3.31%, closing at $68,443.
The fading hopes of a September Fed rate cut among investors had a negative impact on the demand for BTC and the broader cryptocurrency market. The release of more hawkish-than-expected FOMC Meeting Minutes and strong US service sector PMI numbers influenced the market sentiment towards the Fed’s rate trajectory.
The CME FedWatch Tool showed an increase in the probability of the Fed maintaining rates in September, rising from 35.2% to 50.2% by the end of May 24. This shift in expectations was reflected in the US-BTC-spot ETF market flow data, which indicated decreasing net inflows on Wednesday and Thursday.
Despite these challenges, the BTC-spot ETF market still managed to record significant total net inflows of $1,056.7 million for the week ending May 24, providing essential support for BTC at its current price levels.
Upcoming economic data, including the US consumer confidence figures on May 28 and the US Personal Income and Outlays Report on May 31, are likely to further influence the sentiment towards the Fed rate trajectory. Any surprising improvements in consumer confidence, along with positive trends in personal income/spending and persistent inflation, may weaken expectations of a September Fed rate cut.
Amidst these developments, the enthusiasm from the Republican Party leader Donald Trump for the cryptocurrency market seemed to be overshadowed by the prevailing market concerns about the Fed’s rate path.
Contrasting Results: Ethereum’s Resilience
Ethereum (ETH) took a divergent path on Sunday, registering a 2.01% gain and ending the week with an impressive 24.59% increase, reaching $3,826. The progress towards a US ETH-spot ETF market notably boosted the demand for ETH.
Technical Analysis: BTC and ETH Evaluation
Bitcoin Analysis
Bitcoin (BTC) maintained positions above the 50-day and 200-day EMAs, signaling bullish price movements. A breakthrough above the $69,000 resistance level could pave the way for a move towards the $70,000 mark, with potential for a run at the all-time high of $73,808 upon surpassing $70,000.
However, any drop below the 50-day EMA might bring the $64,000 support level into play. With a 14-Daily RSI reading of 57.83, BTC has the potential to reclaim the all-time high before entering overbought territory.
Ethereum Analysis
Ethereum (ETH) also displayed strength above the 50-day and 200-day EMAs, confirming the ongoing bullish trends. A breakout beyond the $3,835 resistance could propel ETH towards the $4,000 level, aiming for the March peak of $4,091.
Conversely, falling below the $3,650 critical support level may expose ETH to bearish pressure towards the $3,480 mark. With a 14-period Daily RSI reading of 70.57, ETH currently sits in overbought territory, possibly facing intensified selling pressure near the $3,835 resistance level.