Bitcoin Price at Risk Amid US GDP and ‘Stagflation’ Worries

Bitcoin experienced a decline below $62,000 as the opening of the Wall Street on April 25 was met with unsettling macro data from the United States. The data, which indicated a stagflationary environment, caused concerns about the possibility of future rate cuts by the Federal Reserve. Trading platforms recorded new multiday lows of $62,785 on Bitstamp. The market sentiment was troubled by the U.S. Q1 gross domestic product (GDP) figures, as it came in at 1.6%, significantly lower than expected. This raised questions about the task of controlling inflation before the Federal Reserve.

The Kobeissi Letter, a trading resource, expressed surprise at the GDP numbers, which were nearly 50% lower than Goldman Sachs’ forecast. The letter questioned what the Federal Reserve would do when faced with rising inflation and a weakening economy. Cutting rates would cause inflation to skyrocket, while raising rates would result in an economic crash. This dilemma may hinder the achievement of a ‘soft landing’. This uncertainty led markets to reduce the probability of the Federal Reserve implementing an interest rate cut in the near future. According to data from CME Group’s FedWatch Tool, the chance of a rate cut at the next meeting of the Federal Open Market Committee, scheduled for May 1, was only 6.3%.

Bitcoin’s performance mirrored that of U.S. equities, particularly tech stocks, as it struggled to maintain its position above $60,000 following a previous dip caused by geopolitical tensions. Despite this, not all traders were anticipating losses. Crypto Chase, a well-known trader, suggested that BTC/USD could reach new highs of up to $68,000. Another trader named Crypto Tony also predicted new macro highs before any price consolidation. Analyst Caleb Franzen identified the short-term holder (STH) realized price of $59,530 as a crucial indicator. The STH realized price represents the average price at which wallets holding Bitcoin for 155 days or less last moved their coins. This indicator has consistently acted as a support level since the end of the bear market in 2022. Franzen stated that if Bitcoin falls below this level, he will adopt a bearish outlook.