Between inflation and sluggish employment, Bitcoin remains trapped in its narrow range

The financial markets are setting new records, gold is regaining its status as a safe haven, but bitcoin remains frozen below $65,000. This inertia contrasts with the euphoria observed on traditional assets and fuels investors’ questions. Indeed, the return of fears of stagflation in the United States, persistent tensions in the Middle East and a more uncertain macroeconomic environment are blurring the lines. Why is the top crypto staying on the sidelines while other markets are moving forward? This divergence could herald a turning point for the market.

Macroeconomic and geopolitical tensions

The latest US economic indicators published by the Institute for Supply Management provide a mixed picture of the global economic outlook. The simultaneous publication of data from the ISM services index and employment figures reflects a worrying failure of fundamentals across the Atlantic. This dual trajectory reveals a risk of stagflation which intensifies over the months, placing the Federal Reserve and investors facing a complex dilemma where inflation starts to rise again while real activity slows significantly.

On the geopolitical front, the absence of a positive catalyst reinforces the overall caution of operators and editorial staff. The possibility of an agreement between Iran and Oman to reopen the strategic maritime route of the Strait of Hormuz was not enough to restore market confidence. In the absence of direct participation from the United States, the effective resumption of international trade remains highly uncertain.

The Iranian Deputy Minister of Foreign Affairs, Kazem Gharibabadi, also wanted to temper expectations during an interview with the state news agency IRNA. So, he has declared that “this agreement does not mean, in itself, that the Strait of Hormuz will reopen”. In this wait-and-see climate, the price of American WTI crude oil stabilized around $76 per barrel, after hitting a three-week low at $74.30 the day before.

Here in detail the key figures from the ISM report:

• The services PMI index: it recorded a minimal increase of 0.1 point in July to stand at 54.1;
• The employment index: it suffered a sudden fall of 3.6 points to fall to 47.4, marking its lowest level since March;
• The prices paid index: it jumped 2.6 points to reach 70.3, marking a continuous increase of 16.9 points since March 2024.

This simultaneous deterioration pushed the analysis firm The Kobeissi Letter to emphasize that “the economy is increasingly under pressure, both from rising prices and a weakening labor market”.

Bitcoin abandoned by investors

Faced with these external tensions, the price of bitcoin oscillates without conviction above $64,000, showing a daily decline of around 0.5% while American stocks open on a neutral note. Stuck in a narrow range in place since the beginning of June, the asset is lagging significantly behind the equity markets and safe havens. The specialists of the on-chain analysis platform Glassnode perfectly summarize this dynamic with a synthetic observation: “the one-line regime: a compressed, under-diverted market that the appetite for global risk has left behind, with bottom-up conditions coming together, but remaining incomplete”.

This situation reflects a profound change in attitude among investors. Rather than seeing panic or mass capitulation, the market sinks into a prolonged period of disinterest. Glassnode thus describes the current state of mind of investors as falling within “boredom rather than capitulation”. The lack of reaction of bitcoin to the rise of gold and the peaks of stock indices reveals a temporary disaffection of institutional capital for the crypto asset class.

In search of a macroeconomic floor: prospects for ending the crisis

To break this immobility, experts believe that a signal of unprecedented magnitude will be essential to determine the future trajectory of the price. Bitfinex Research team urges caution before anticipating a sudden recovery or fall: “While macroeconomic developments and bitcoin’s underperformance versus the Nasdaq and S&P 500 signal underlying stress, a true breakout requires something more impactful, followed by volume-supported price action”.

Some analysts do not hesitate to make comparisons with the 2022 bear market, fearing a gradual erosion of current support levels before reaching a definitive macroeconomic bottom.

Ultimately, bitcoin appears trapped between the deterioration of macroeconomic indicators and widespread investor apathy. If the accentuation of fears of stagflation could theoretically restore meaning to the alternative store of value properties of the asset, the current absence of volumes requires the greatest restraint. The history of financial cycles, however, demonstrates that such phases of extreme compression almost always precede particularly violent market movements, leaving investors waiting for a decisive trigger.