Fed Hawkishness Limits Bitcoin Rebound
Bitcoin rallied on Wednesday (July 1st) and returned slightly above the psychological level of US$60,000. However, the world's largest cryptocurrency remains under significant pressure after experiencing sharp declines throughout the previous quarter.
Bitcoin is currently trading around US$60,125, after falling to an intraday low of around US$57,891. This movement indicates a technical rebound, but it is not strong enough to change the underlying market sentiment, which remains fragile.
Pressure on Bitcoin continues to stem from expectations of high US interest rates. The Federal Reserve previously signaled a hawkish stance in its June meeting, leading the market to expect at least one interest rate hike this year. This year's interest rate environment remains open. High interest rates typically weigh on speculative assets like crypto because they offer no yield.
In addition to interest rates, investor interest in crypto has also been hampered by the rotation of funds into artificial intelligence (AI)-based stocks. Investors currently prefer riskier assets with clearer earnings fundamentals, such as technology and AI infrastructure companies, over crypto assets, which remain highly speculative.
Outflows from spot Bitcoin ETFs also remain a major pressure. ETF products, which were previously a major catalyst for Bitcoin, are now facing institutional selling pressure. If outflows continue, demand for Bitcoin could potentially remain limited in the short term.
Market sentiment is also influenced by uncertainty surrounding the United States-Iran peace talks. Although technical talks are ongoing, there is no certainty of a diplomatic breakthrough. This geopolitical uncertainty is keeping investors cautious about high-risk assets.
Federal Reserve Chairman Kevin Warsh also declined to provide direct guidance on the next direction in interest rates. At a central bank forum in Sintra, Portugal, Warsh emphasized that the Fed's decision would depend heavily on economic data. This stance has led to market focus on the upcoming US employment and inflation data.
Politically, crypto market attention is also focused on President Donald Trump's financial report. Trump reportedly recorded more than US$1.4 billion in revenue from his family's various crypto businesses by 2025. This income came from World Liberty Financial, crypto token sales, and the $TRUMP memecoin.
In the altcoin market, Ethereum rallied to around US$1,617.82, while Solana rose to around US$77.30. A number of other altcoins, such as XRP, Cardano, BNB, Dogecoin, and $TRUMP, also saw gains. However, most crypto assets are still trying to recover significant losses from the previous quarter.
Overall, Bitcoin did manage to rebound above US$60,000, but fundamental pressures have not completely dissipated. As long as ETFs continue to record outflows, the Fed remains hawkish, and investors prefer AI stocks, Bitcoin's upside remains limited.
Looking ahead, the US$60,000 area is a key level to maintain. If Bitcoin can hold above this level, a rebound towards US$61,500 to US$63,000 could open up. However, if it falls back below US$58,000, the risk of further weakness towards the US$56,500 area remains a concern. (arl)
Source: Newsmaker.id
