Bitcoin Hovers Above $30.3K Despite Renewed Inflation Concerns
Unemployment claims fell while productivity rose – both unexpected.
Digital assets responded with an unseen shrug, mostly rising slightly from where they were 24 hours ago.
Bitcoin, the largest cryptocurrency by market cap, recently traded at $30,374, up 1% from the same Wednesday. BTC has been on a rollercoaster ride for the past few days, albeit in the kid version, briefly surging above $31,000 on Tuesday after news revealed that Fidelity Investments would join BlackRock in the line of financial services giants, the spot bitcoin ETFs apply but slip below $30,000 on Wednesday as investors paused to consider the timing of an SEC approval and inflationary pressures.
On Thursday, Fidelity resubmitted the paperwork for its Wise Origin Bitcoin Trust, a spot bitcoin ETF.
“Yes, interest rates in the United States could be hiked again, a recession could be nigh in both America and across Europe”, Nick Rose Ntertsas, CEO and co-founder of NFT platform Ethernity, wrote in an email to AskFX. “But we are also seeing central bank interventions in a number of major economies that have actually served as liquidity drivers. Risk assets, in particular, respond well to these liquidity plays, and Bitcoin and digital assets are no different.”
Ntertsas added, “Looking ahead, I expect we have about half a year of volatility to go before we see one experience big upswing like late 2020 and early 2021. That’s when the bitcoin halving will kick in, meaning we’re going to get to the races.”
Ether, the second-largest cryptocurrency in market value, recently changed hands at $1,848, also up 1 % from Wednesday at the same time Other major cryptos traded in a slightly green-tinged area, although SOL, the token of the Solano smart contracts blockchain, recently gained more than 10%
As AskFX reported on Thursday, Crypto traders on the Solana blockchain have followed the example of Ethereum’s liquid staking token (LST) trend, using their SOL token derivatives to generate high returns through a blunt re-leveraging process. The emergence of the trend follows Tuesday’s release by Drift Protocol of a new service known as “Super Staking” that encapsulates the entire cycle in a one-click operation.
The AskFX Market Index, a measure of crypto performance, was up 1.7%.
Equity markets were mixed, with the Dow Jones Industrial Average (DJIA) and S&P 500 rising 0.6% and 0.2% respectively on positive US economic data. Gross domestic product (GDP) for the first quarter was revised up to 2%, beating expectations of 1.4% growth. And the Labor Department said jobless claims for the week ended June 24 fell by 26,000 to 239,000, the sharpest drop since October 2021 and below expectations of 265,000.
Both figures contradicted hopes that the economy is cooling and inflation will ease further, allowing central banks to suspend interest rate hikes that have weighed heavily on asset markets.
At the Banco de Espana’s Fourth Financial Stability Conference, Federal Reserve Chair Jerome Powell highlighted the central bank’s uncertainty about the appropriate inflation medicine in the coming months, despite hinting in recent weeks that the Fed would raise interest rates in the coming months.
“Nonetheless, inflationary pressures remain elevated and the process of bringing inflation back to 2 percent still has a long way to go,” Powell said, adding, “We are seeing the impact of our policy tightening on demand in the US.” most interest-rate sensitive sectors of the economy, particularly housing and investment. However, it will take time for the full effects of monetary policy dovishness to be felt, particularly on inflation.”
In an email to AskFX earlier this week, Toronto-based crypto platform CEO Stephane Ouellette wrote that BlackRock and other ETF applications had given markets a boost. “In our view, the biggest added value for the industry from a US-domiciled spot ETF is that despite the bear market and an awful 18 months of headlines, some of the most respected trading firms in the world continue to enter this space,” Ouellette wrote.
Ouelette added, “Retail has even more opportunities to get passive exposure to BTC. While some US-based retail investors may now be able to buy the US ETF through their basic brokerage accounts, we consider the continued acceptance of this asset class by the likes of Blackrock and Fidelity to be the real story.
