Bitcoin, BTC/USD, Market Sentiment, Inflation, Technical Outlook – Talking Points
- Bitcoin crashes amid risk aversion fueled by recession fears
- The US stock market ends the quarter behind the Asian stock markets
- BTC/USD is breaking key support levels with prices heading lower
Asia Pacific Outlook for Friday
Bitcoin prices fell overnight, slipping alongside risky assets, including stocks and other cryptocurrencies, as Wall Street traders hit the sell button on renewed recession fears. BTC/USD is down more than 6% during the New York session, breaking through the 20,000 and 19,000 levels. The high-beta Nasdaq-100 Index (NDX) declined 1.33%, ending a volatile second quarter. Quarter-end rebalancing, a period when funds review their portfolio allocations, may have contributed to some of the bleeding in risk assets. Asian equity markets outperformed their US counterparts, with the Hang Seng Index (HSI) and China’s 300 posting gains in June.
Treasury yields were bid after US personal consumption spending (PCE) data crossed the wires cooler than expected. The core figure — used as the Federal Reserve’s preferred measure — fell to 4.7% year-on-year in May from 4.9% in April. This suggests that inflation may have peaked as it has now been three consecutive months of lower readings. The data is likely to be encouraging for central banks, but the Fed is most likely stuck on its July rate hike. Gold prices fell to their lowest level since May 16 after the data.
A striking report from the Federal Reserve Bank of Atlanta showed that US second-quarter GDP growth was downgraded to -1.0% from 0.3%. A slowdown in US growth is becoming increasingly likely. Meanwhile, China on Wednesday showed signs that economic activity is recovering following the easing of Covid restrictions. The NBS composite PMI rose to 54.1 from 48.4 in June, a sharp move from contraction to expansion. Despite the rosy data, iron ore prices fell for a third day.
This morning, Australia’s Ai Group Manufacturing Index for June rose to 54 from 52.4 in May. The rise is an encouraging data point for Australia’s economy amid rising economic uncertainty. New Zealand building permits fell 0.5% in May versus -8.6% in April. NZD/USD and AUD/USD both caught a bid overnight, helped by a dollar dragged lower by falling Treasury yields.
Notable events for June 30:
- South Korea – Exports (June)
- South Korea – S&P Global Manufacturing PMI (June)
- India – S&P Global Manufacturing PMI (June)
- India – Trade Balance (June)
Click here for today’s full economic calendar
BTC/USD technical forecast
Bitcoin ended June with a staggering 41.2% loss, its worst monthly performance on record. The overnight drop saw the psychologically important 20,000 and 19,000 levels taken out with prices approaching the June low of 17592.78. A break below would take prices to their lowest levels since November 2020. The Relative Strength Index (RSI) slipped below the 30 level, highlighting extreme weakness that could last well into July.
BTC/USD daily chart
Chart created with trading view
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas use the comments section below or @FxWestwater on twitter
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