While Bitcoin seemed to be heading towards $75,000, the latest US economic data abruptly interrupted this rise. Faced with unchanged personal consumption expenditure (PCE) inflation and significant underlying inflation, hopes of monetary easing by the Federal Reserve are dwindling, plunging investors into doubt. This tense macroeconomic context, coupled with the cautious reactions of institutional players, aggravates the pressure on long positions and amplifies price volatility.
Bitcoin falls in the face of US economic data
While Bitcoin stagnated around $72,000 on October 31, 2024, the latest US personal consumption expenditure (PCE) data failed to reinvigorate the market. In fact, these data leave him in a dynamic of withdrawal. The September report showed that inflation in personal consumption expenditures, the Fed's preferred indicator for tracking inflation, fell to 2.1%, in line with expectations. In contrast, underlying inflation (Core PCE) remained unchanged at 2.7%, slightly above forecasts of 2.6%.
It should be noted that it has now been six months since underlying inflation has stopped falling, which calls into question the effectiveness of the Fed's tightening policy. Such a situation pushed the trading resource The Kobeissi Letter to react. “The Fed’s rate cut is once again delayed,” he said. declared on X. Thus, the market had hoped for a sign of easing of Fed policies, but this expectation was thwarted by still high indicators. The PCE rate, closely followed by investors for its implications on the Fed's decisions, has only reinforced the idea of a strict monetary policy in the immediate future.
At the same time, the probability of a pause in rate hikes at the Fed meeting on November 7 has consolidated at 96%, leaving little room for adjustments favorable to risky assets like Bitcoin. This context has put the crypto market in waiting mode, with increasing pressure on long positions. For investors, it is the US employment report on November 1 that could well bring the next wave of volatility for BTC, which reminds us that macroeconomic hazards still have a hand on the trajectory of the asset.
The reaction of market participants and the implications for Bitcoin
Faced with this discouraging economic situation, “whales” and other institutional investors quickly adjusted their positions. Market order data shows a marked decrease in exposure for large BTC holders, showing increased caution in the face of economic uncertainties. Over $500 million in open interest has already disappeared with just a 2% drop in price. This reduction in open interest, coupled with the behavior of whales, reflects a loss of confidence in the ability of Bitcoin to sustainably cross the $70,000 threshold in this context.
With the monthly close due, Bitcoin is approaching its key resistance level, with an increase of more than 13% over the month of October. However, volatility appears to be intensifying in the coming days, making price action difficult to anticipate. The influence of the Fed, combined with the cautious behavior of major players, hardly suggests an immediate surge.
In short, macroeconomic pressure and the increased caution of influential players create fertile ground for increasing volatility. Future events, in particular economic publications and decisions by the Fed, will be decisive in assessing whether Bitcoin can really reach or even sustainably maintain the $70,000 mark.
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