Bitcoin, BTC/USD, Market Sentiment, Inflation, Technical Outlook - Talking Points
- Bitcoin plummets amid risk-off move triggered by recession fears
- US stock market closes quarter trailing Asian stock counterparts
- BTC/USD breaks key levels of support, with prices aiming lower
Friday's Asia-Pacific Outlook
Bitcoin prices sank overnight, sliding alongside risk assets, including stocks and other cryptocurrencies, as Wall Street traders hit the sell button on renewed recession fears. BTC/USD lost more than 6% during New York trading hours, breaking the 20,000 and 19,000 levels. The high-beta Nasdaq -100 Index (NDX) shed 1.33%, closing out a volatile second quarter. Quarter-end rebalancing, a period when funds reexamine their portfolio allocations, may have contributed to some of the bleeding in risk assets. Asian equity markets managed to outperform US counterparts, with the Hang Seng Index (HSI) and China's 300 posting gains for June.
Treasury yields caught a bid after US personal consumption expenditure (PCE) data crossed the wires cooler-than-expected. The core reading—used as a preferred metric by the Federal Reserve—dropped to 4.7% year-over-year in May from 4.9% in April. That signals that inflation may have peaked since it is now three consecutive months of lower readings. The data is likely encouraging to central banks, but the Fed is more than likely locked into its July rate hike. Gold prices fell to the lowest level since May 16 after the data.
An eye-catching report from the Federal Reserve Bank of Atlanta showed that US GDP growth in the second quarter at -1.0%, downgraded 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 loosening of Covid restrictions. The NBS's composite PMI in June rose to 54.1 from 48.4, a strong 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 the Aussie economy amid the growing economic uncertainty. New Zealand building permits fell 0.5% in May, up from -8.6% in April. NZD/USD and AUD/USD both caught a bid overnight, aided by a Dollar dragged down 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 – Balance of Trade (June)
Click here to view today's full economic calendar
BTC/USD Technical Forecast
Bitcoin closed out June with an astonishing 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 nearing the June low at 17592.78. A break below that would put prices at the lowest level since November 2020. The Relative Strength Index (RSI) slipped below its 30 mark, highlighting extreme weakness that may persist well into July.
BTC/USD Daily Chart
Chart created with TradingView
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--- Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
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