Bitcoin casts off a U.S. GDP “nothingburger,” but DXY charges to two-week highs in what is traditionally a BTC price headwind.
Market Update
Bitcoin (BTC) ate away at the prior day’s gains on July 27 as United States macroeconomic data produced a muted reaction.
Analyst warns of BTC price dip
Data from Cointelegraph Markets Pro and TradingView showed BTC price strength waning after a brief push to $29,680 into the daily close.
The largest cryptocurrency had offered a modest uptick after the Federal Reserve hiked interest rates to their highest since 2001 — a move already priced in by markets.
The day’s U.S. gross domestic product (GDP) advanced print for Q2 came in better than forecast at 2.4% annualized, pointing to inflationary pressures continuing to ebb in what could prove a catalyst for risk asset performance.
Bitcoin did not noticeably react, however, with stocks likewise fairly flat after the Wall Street open.
Michaël van de Poppe, founder and CEO of trading firm Eight, thus hoped that the July 28 Personal Consumption Expenditures (PCE) Index release would provide a more tangible growth incentive.
“GDP comes out way more positive than expected. That’s great. Soft landing case starts to pick up pace. If GDP was worse than expected, you’d see markets drop,” he argued in a Twitter update.
“Bitcoin steady, stocks steady. Now PCE better than expected and we go up.”
A subsequent post nonetheless cautioned that BTC/USD could see a dip beforehand, while $29,700 now formed a line in the sand.
Open Interest to new highs, price grinding upwards, seems likely to sweep down before up for #Bitcoin.
If not? Break $29,700 in one-go and we’ll have a party. pic.twitter.com/CxznrbMCVh
— Michaël van de Poppe (@CryptoMichNL) July 27, 2023
On-chain monitoring resource Material Indicators, meanwhile, suggested ahead of time that the GDP would be a “nothingburger” for crypto.
An accompanying chart of the BTC/USD order book on the largest global exchange, Binance, showed support still thin above $28,500, potentially easing a market drop should one begin.
“The strong economy/soft landing narrative is gaining some traction, but the FED would still like to see softening of the labor market to support the thesis relative to what the ‘historical record’ shows about the correlation between the labor market and inflation,” Material Indicators added in part of additional analysis.
U.S. dollar strength hits two-week highs
The GDP likewise had little impact on market expectations for where Fed policy would go at the next interest rate decision point in September.
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On the day, odds of rates pausing at their current 5.25-5.5% stood at 76%, with a 24% likelihood of another 0.25% hike, according to CME Group’s FedWatch Tool.
Commenting on the outlook for crypto vis-a-vis U.S. macro movements, financial commentator Tedtalksmacro called the rate hike event “very vanilla.”
“The markets reacting as if we are just one more hike closer to a pause, BTC and US equities higher,” he concluded the day prior.
One conspicuous reaction traditionally a headwind for crypto was U.S. dollar strength, which spiked on July 27.
The U.S. Dollar Index (DXY) hit 101.84, its highest since July 11 and furthering a bounce from its lowest levels in over a year.
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