3 reasons why $65K marks the bottom for Bitcoin
Despite testing the $65,000 support on June 14, Bitcoin (BTC) has not closed below $66,000 since May 17. Although BTC failed to break above the $72,000 resistance during this four-week period, some events have improved the sense of control and highlighted how little it is. The US central bank has left to move without raising inflation. Favorable market conditions and low resilience in Bitcoin derivatives benchmarks indicate that the downside is extremely limited.
Washington is slowly becoming more crypto-friendly.
On May 16, US lawmakers passed a congressional review bill to investigate a Securities and Exchange Commission (SEC) rule that would require listed companies, including banks, to record crypto assets as both assets and liabilities. Senator Cynthia Lammis said the vote was a milestone as it was the first “standing crypto bill” passed by Congress.
The proposal was ultimately vetoed by President Joe Biden, but the Democrats' opposition shows the “growing number” and “increasing influence” of crypto participants in US politics, said Craig Warmke of the Biden Policy Institute. Both houses of Congress must get a two-thirds vote to override.
The banking sector has an economic incentive to provide fostering services for cryptocurrencies, as banks want their share of continued crypto adoption. Flexa's chief compliance officer, Daniel McCabe, believes that “pro-crypto lobbies and the banking industry can be completely influenced.”
Perrian Boring, founder and CEO of the blockchain trade association Digital Chamber, described the Democrats' support for the Biden administration as a “watershed moment.” Schumer's lackluster support is boding well for crypto in Washington, he said. Basically, Biden should. Assess whether it is worthwhile to oppose HJRes 109 because internal conflict within the Democratic Party may open up.
The Federal Reserve will soon change its tight monetary policy
The US Federal Reserve is under intense pressure to cut interest rates to prevent a recession. The latest data shows that inflation remains stubbornly above the Fed's 2% target, with the Consumer Price Index (CPI) at 3.4%.This steady inflation, combined with a slight increase in unemployment from 3.9% to 4% in May, is softening the labor market. It means he's gone.
US 2-year Treasury yields fell to a 70-day low of 4.69%, reflecting market concerns about future economic growth. Meanwhile, the S&P 500 hit its all-time high on June 13 as investors moved into stocks and other smaller assets to avoid cash positions eroded by inflation and low bond yields.
The Federal Reserve's cautious approach to monetary policy is evident in its recent decision to slow its tightening program, reflecting cautious optimism that inflation is stabilizing. However, if the Fed does not adjust policy soon, the recession could worsen as high borrowing costs dampen consumer spending and business investment.
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Bitcoin derivatives have shown resilience despite an 8% price drop.
Between June 6 and June 14, the price of Bitcoin fell by 8.5%, testing the $65,000 support level. Despite this drop, the size of the protagonists did not show any significant change. Bitcoin futures premiums reflect the difference between monthly contracts in derivative markets and spot rates on regular exchanges. Typically a 5% to 10% annual premium (basis) is expected to compensate for the extended settlement period.
On June 14, Bitcoin's 2-month futures premium remained above 10%, marking the entry point for a bull market. Despite being less optimistic than last week, the Bitcoin derivatives market showed no signs of distress or excessive interest in short (selling) interest. Given the current regulatory and economic trends, the odds favor a consolidation of the $65,000 support level.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
