New York, NY – With U.S. economic activity on the minds of traders, the month ahead may prove turbulent for Bitcoin. The recent release from the Bureau of Economic Analysis showing a jump in the real gross domestic product (GDP) to 1.4% in the first quarter of 2024 has sparked renewed interest in monitoring economic indicators.
Contrasting sharply with last year’s fourth-quarter results, this data has raised concerns over a potential economic slowdown. Moreover, a slight decrease in the personal consumption expenditures index, a key measure of inflation, hints at possible cooling in the economic landscape.
Experts like Jag Kooner, head of derivatives at Bitfinex, point to a potential resurgence in volatility in the coming months. With additional regulatory developments and macroeconomic policies looming, market participants are advised to keep a close eye on developments.
The prospect of a slowing economy has also led to speculation about potential cuts by the US Federal Reserve. As the Fed aims to manage price stability and control economic overheating, there is a possibility of lower interest rates in the future. This could translate to cheaper borrowing and increased interest in risk assets like Bitcoin.
Historical trends suggest that during economic downturns, investors often turn to Bitcoin as a safe haven. As anticipation builds for the next Federal Open Market Committee meeting in July, futures traders are already factoring in the likelihood of rate cuts later in the year.
Despite some predicting heightened volatility in July, others like Pratik Kala, head of research at DigitalX, remain skeptical. Kala suggests that July could be a period of consolidation and low volatility for Bitcoin, with the third quarter historically seeing reduced market activity due to key decision-makers being on holiday.
While Bitcoin recently reached a one-week high near $63,700, it remains down 14% from its all-time high in March. With the upcoming U.S. elections and potential shifts in Fed policy, the cryptocurrency market is bracing for a period of uncertainty and change.
