Bitcoin (BTC) Shows Resilience Amid Macroeconomic Uncertainties

Bitcoin
(BTC)
has
demonstrated
notable
resilience
in
recent
weeks,
driven
by
robust
spot
ETF
flows
and
consistent
net
inflows,
as
detailed
in
the
latest
report
from
Bitfinex
Alpha.
Despite
a
generally
positive
trend,
stronger-than-expected
US
jobs
data
on
Friday
caused
a
price
dent,
raising
concerns
about
the
timing
of
potential
rate
cuts.

Market
Resilience
and
Inflows

According
to
Bitfinex
Alpha,
Bitcoin
has
seen
20
consecutive
trading
days
of
net
inflows,
bolstered
by
strong
spot
ETF
flows.
However,
the
inability
to
break
past
range
highs
remains
a
short-term
negative
factor.
The
market
also
shows
high
open
interest
on
BTC
and
altcoin
perpetual
futures,
coupled
with
high
funding
rates,
suggesting
potential
future
price
corrections
due
to
leveraged
positions.

Increased
Activity
Among
Short-Term
Holders

Short-term
Bitcoin
holders
have
been
increasingly
active,
with
holdings
rising
from
2.2
million
BTC
in
January
to
over
3.4
million
BTC
by
mid-April.
This
surge,
primarily
driven
by
the
buying
of
spot
Bitcoin
ETFs,
has
introduced
a
degree
of
sensitivity
to
price
volatility.
In
contrast,
long-term
Bitcoin
holders
exhibit
strong
market
conviction.
Recent
data
indicates
a
halt
in
selling
among
this
cohort,
with
BTC
held
for
over
a
year
remaining
inactive.

Macroeconomic
Factors
Impacting
Crypto

Macroeconomic
developments
continue
to
impact
crypto
asset
prices.
Newly
released
April
data
on
US
job
openings
revealed
a
sharp
drop,
indicating
a
slowing
economy.
However,
May
employment
data
contradicted
this
trend
by
showing
an
unexpected
surge
in
labor
demand,
casting
doubt
on
the
likelihood
of
near-term
rate
cuts.
This
discrepancy
puts
the
US
at
odds
with
other
central
banks,
such
as
the
European
Central
Bank
and
the
Bank
of
Canada,
which
began
cutting
rates
last
week
to
foster
recovery
and
growth.

The
US
services
sector
also
rebounded
in
May,
reversing
April’s
contraction,
with
business
activity
reaching
its
fastest
pace
in
three
years.
This
resilience
complicates
the
Federal
Reserve’s
decision-making,
as
they
balance
signs
of
economic
weakness
with
areas
of
significant
strength.

Potential
Risks
of
Prolonged
High
Interest
Rates

While
the
US
economy’s
strength
and
adaptability
could
enable
it
to
thrive
even
with
high
interest
rates,
driven
by
robust
labor
demand
and
rising
wages,
there
is
a
risk
that
prolonged
high
interest
rates
could
stifle
economic
activity.
This
might
reduce
investment
and
job
creation,
potentially
leading
to
a
downturn.

Legal
Actions
and
Regulatory
Developments

In
other
crypto
news,
New
York
Attorney
General
Letitia
James
has
initiated
legal
action
against
AWS
Mining
and
NovaTech
for
allegedly
running
crypto
pyramid
schemes.
These
companies
and
their
promoters
promised
high
returns
but
operated
as
pyramid
and
Ponzi
schemes,
misleading
investors.
Meanwhile,
ProShares
has
filed
with
the
SEC
to
list
a
spot
Ethereum
ETF
on
the
NYSE,
with
a
decision
expected
by
late
July
2024.
The
proposal,
which
complies
with
SEC
guidelines,
excludes
Ether
staking
features,
limiting
investor
yield
opportunities
but
aligning
with
regulatory
standards
for
broader
market
acceptance.

Image
source:
Shutterstock

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