Markets
Gold Futures Rise Amid Fed Rate Cut Optimism, Will Crypto Market Reflect Recovery?
Gold futures saw a significant rise, climbing 0.5% to $2,381 per troy ounce, as US Treasury yields fell. This increase is largely attributed to increased expectations of a Federal Reserve lower interest rates. This follows weak US retail sales data on Tuesday and inflation moving closer to the Fed’s target. Therefore, netizens are speculating about a potential rebound in Bitcoin (BTC) and the entire crypto market.
Gold Market Against Crypto
SP Angel analysts noted in a report that these economic indicators have reinforced hopes for a rate cut. Friday’s PPI also increased optimism about a Fed rate cut. Historically, gold prices have had an inverse relationship with interest rates, as higher rates decrease the attractiveness of non-interest-bearing assets like gold.
Additionally, ongoing conflicts in the Middle East are pushing investors towards safe haven assets, further supporting gold prices. Meanwhile, the silver market is also seeing gains, with London Bullion Market Association (LBMA) silver prices rising 2.6% to $30.23 per ounce, in line with the upward movement gold.
On the other hand, the crypto market is currently facing bearish sentiments. Bitcoin fell to $64,000, leading the decline among other major cryptocurrencies such as Ethereum (ETH), Solana (SOL), XRP, and LayerZero (ZRO). Despite the overall negative trend, Dogecoin (DOGE) has managed to remain stable.
The global crypto market cap decreased by 0.94% over the past day, now standing at $2.34 trillion. Despite the decline in market capitalization, the global crypto market volume jumped 15.23% to $69.76 billion. Meanwhile, prominent market commentator Peter Schiff pointed out on X that Bitcoin has fallen 14% since March 14, despite its purchases on March 11. Spotting Bitcoin ETFs.
However, he pointed out that gold increased by 10% during the same period. Additionally, he pointed out that investors who sold their gold ETFs to buy Bitcoin ETFs are now facing a 24% loss. Schiff also wondered how long it would take them to realize their mistake.
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Will the crypto market recover?
Bitcoin currently finds itself at a critical juncture, with the risk of a prolonged correction from its recent high of $70,000. The cryptocurrency is dangerously close to key support at $60,000. As market instability increases, irrational panic-driven selling could exacerbate the situation, potentially leading to a significant decline, with altcoins likely following suit.
The outlook for Bitcoin is bleak, with the largest digital asset at risk of sliding to $50,000 before potentially recovering in the second half of 2024. Altcoins have also suffered, with Ethereum it is struggling to hold support at $3,500 and Solana risks falling below $130 if the downtrends continue.
Currently, Bitcoin dominance stands at 51.2% while Ethereum holds 17.4%. The enthusiasm seen in the market in May faded, with Bitcoin bulls pushing the price from $56,000 to nearly $72,000 before the momentum stalled.
Additionally, despite the approval of Spot Ethereum ETFs in the US, which boosted sentiment and pushed the Fear and Greed Index to 74, recent performance has been disappointing. Additionally, the Federal Reserve maintains a hawkish stance on rate cuts despite slowing inflation. This has been a key factor in the economic downturn.
Additionally, Bitcoin miners reportedly capitulated after the April halving, which reduced mining rewards from 6.25 to 3.125 BTC per block. This increase in selling pressure, combined with negative sentiment and weakening support levels, suggests a tough time ahead for Bitcoin and the broader crypto market.
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