Bitcoin Price Rebound May Hit in 10 Days as Fed Liquidity ‘Rips Higher'

Cryptocurrency

Summary:

Bitcoin price behavior — including its run to all-time highs in March — is displaying an uncanny correlation to Fed liquidity.

Bitcoin has around 10 days until United States macro conditions support a return to BTC price upside.

That is according to financial commentator Tedtalksmacro, who tracks the correlation between BTC price action and U.S. Federal Reserve liquidity.

BTC price action strictly correlated to Fed liquidity

Bitcoin may be down around 3.2% in June, but the tables may turn before the month is out.

Analyzing how Fed liquidity conditions impact BTC/USD, Tedtalksmacro revealed a close correlation, which has held for several months.

“The correlation between Bitcoin + Fed Liquidity never ceases to amaze me,” he wrote in accompanying commentary on X.

“Liquidity bottoms in the coming 10 days, then rips higher again... get ready.”

BTC/USD vs. Fed liquidity. Source: Tedtalksmacro

A chart from his proprietary macro data resource, Talking Macro, showed BTC price highs and lows syncing with local peaks and troughs in Fed liquidity.

Even Bitcoin’s latest all-time high of $73,800 in mid-March was accompanied by a liquidity spike.

Clarifying how liquidity is calculated, Tedtalksmacro confirmed that the figure is based on “a mixture of Fed assets, repo markets, treasury data.”

Bitcoin ETFs await U.S. wirehouse influx

Talking Macro referred to problematic short-term headwinds for Bitcoin, noting a new decline in inflows to the U.S. spot Bitcoin exchange-traded funds (ETFs).

After seeing their second-highest daily inflows on record in early June, the trend reversed, with the past four Wall Street trading days conversely seeing net outflows.

Data from monitoring resources, including United Kingdom-based investment firm Farside Investors put the four-day outflow tally at just over $700 million — still less than the June 4 $886 million inflow. Bitcoin Price Rebound May Hit in 10 Days as Fed Liquidity ‘Rips Higher'_2

Bitcoin Price Rebound May Hit in 10 Days as Fed Liquidity ‘Rips Higher'_2

Bitcoin ETF flows (screenshot). Source: Farside Investors

Anticipation continues to build for the third quarter and beyond when it comes to a new wave of institutional interest in Bitcoin, as U.S. wirehouses are predicted to gain access to spot ETF products.

As Cointelegraph reported, that event forms a key point on the radar for those eyeing Bitcoin’s continuing transformation into an institutional heavyweight investment class. Among them is Cathie Wood, CEO of asset manager ARK Invest, one of the spot ETF providers.

“No platform has approved Bitcoin yet, so all of this price action has happened before they approve it, and so we haven’t even begun,” she said in an interview in March about U.S. wirehouses.

Source: Cointelegraph

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Alex

Economic

Sales of new battery-electric cars in the EU dropped 12% in May from a year earlier, led by a 30% plunge in Germany, data from Europe’s auto industry body showed on Thursday.

Germany, the bloc’s largest electric vehicle (EV) market, in December brought an early end to subsidies for buying EVs as part of a last-minute 2024 budget deal. There has now been a year-to-date 16% decline in EV sales, according to the European Automobile Manufacturers Association (ACEA).

Overall new car sales in the bloc fell by 3% in May from the same month in 2023, the second drop in 2024, and were down 2.6% in a wider region covering the EU, Britain and the European Free Trade Association (EFTA), the association said.

Demand for EVs in Europe has cooled in recent months, after rising strongly for several years, while competition to produce more affordable models has grown.

To shield domestic carmakers from an influx of cheap EV imports, the European commission said last week it would impose provisional duties of up to 38.1% on China-made EVs starting in July.

US electric carmaker Tesla said last week it expected to increase the price of its China-made Model 3 when the EU measures came into effect. Elon Musk’s company recorded a 34.2% drop in May sales in the EU.

The current stagnation of the EV market had been expected for years but sales should pick up from 2025 when the next EU car emission targets kick in, European campaign group Transport & Environment (T&E) said in a briefing on Thursday.

Electrified vehicles — fully electric models, plug-in hybrids and full hybrids — accounted for 48.9% of all new EU passenger car registrations in May, up from 46.2% a year earlier.

While the market share of fully electric cars fell to 12.5% from 13.8% in May 2023, the share of hybrids rose to 29.9% from 25%.

Total EU registrations for Volkswagen rose 1.6% in May, while registrations of Stellantis and Renault fell 6.9% and 5.4%, respectively. Toyota’s sales were up 13%, the data showed

Source:Business Day

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Warren Takunda

Economic

Britain's central bank looks on course to hold interest rates at a 16-year high of 5.25% on Thursday as underlying inflation pressures prove persistent, depriving Prime Minister Rishi Sunak of a much-needed boost ahead of a July 4 election.

Bank of England Governor Andrew Bailey opened the door early last month to a rate cut, saying he was "optimistic that things are moving in the right direction" and that a June rate cut was an option - although no fait accompli.

But despite data on Wednesday showing headline inflation fell back to the BoE's 2% target for the first time in nearly three years in May - reaching its goal quicker than in the United States or euro zone - the medium-term picture is now less reassuring.

Services price inflation has fallen less than the BoE expected at the time of the last meeting - only declining to 5.7% rather than 5.3% - and private-sector wage growth is almost twice the rate the BoE judges as compatible with 2% inflation.

Last month the central bank forecast inflation would rise to around 2.6% by the end of the year, as the effect of recent cuts to regulated household energy bills faded.

None of the 65 economists in a Reuters poll last week said they expected the BoE to follow the lead of the European Central Bank and cut rates this month, with the next statement on Aug. 1 looking by far the most probable start date for an easing cycle.

Instead, the expectation is for a repeat of May's 7-2 vote split, when Deputy Governor Dave Ramsden and external Monetary Policy Committee member Swati Dhingra voted for a quarter-point cut.

"We think the Bank of England is left waiting for more reassuring data ... either in the shape of a more decisive moderation in services CPI or with all other broader signals ... pointing in a softer direction," Victoria Clarke, chief UK economist at Santander, said.

While unemployment is at a two-and-a-half year high of 4.4%, economic growth this year has been reasonable by Britain's recent weak standards.

Financial markets are doubtful about an August rate cut. On Wednesday they priced in only a 30% chance, with a first move more likely in September and a risk of a delay until November, similar to expectations for the U.S. Federal Reserve.

Either way, any cut is likely to be too late for Sunak, whose Conservative Party is around 20 points behind the opposition Labour Party in the pre-election polls.

While Sunak has sought credit for the fall in inflation since he took office in October 2022, when it was at a 41-year high of 11.1%, Labour blames high mortgage rates on economic mismanagement by the Conservatives' previous leader, Liz Truss.

Since the start of the election campaign the BoE has been in a self-imposed period of silence, cancelling public events.

Before that, BoE Chief Economist Huw Pill had described an excessive focus on a June rate cut as "ill advised" but both he and Deputy Governor Ben Broadbent - who steps down at the end of this month - said a rate cut over the summer was possible.

The BoE began to raise rates in December 2021, earlier than other major central banks, and they reached their current peak in August 2023.

Source: Reuters

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Warren Takunda

Economic

Currency interventions by Japanese authorities appear to be having little effect on the yen's weakness against non-U.S. currencies, as carry trades drive the yen to historic lows against the Swiss franc, British pound and more.

The market's response to the Bank of Japan's caution at its policy meeting last week is "fueling selling pressure on the yen," said Takumi Naya at Sumitomo Mitsui Banking.

The yen weakened to around 158 against the dollar on Wednesday. The BOJ at the meeting decided against reducing its purchases of Japanese government bonds until at least July, which put the spotlight on Japan's rate gap with the U.S., where interest rates are now above 5%.

With traders continuing to sell the yen, the market is watching whether the Japanese currency returns to the 160 mark against the dollar reached on April 29. Japan is believed to have conducted its first yen-buying intervention of the year that day.

The Japanese government and the BOJ spent 9.7 trillion yen ($61.4 billion) intervening in the currency market over April and May. The possibility of further interventions is believed to be keeping the currency about 2 yen stronger against the dollar than it otherwise would be.

But the yen continues to depreciate against other currencies seen as less likely to draw Japanese intervention.

The Japanese currency hit the 178 range against the Swiss franc on Tuesday, its weakest in data going back to 1982. It also reached the 201 range against the pound on Friday, a roughly 16-year low.

The yen also marked a 17-year low against the New Zealand dollar on Friday and an 11-year low against the Australian dollar on Wednesday.

The currency did strengthen against the euro following the Japanese intervention. But the yen has since weakened to the 169 range from the 167 range marked Friday.

The trend extends to emerging currencies as well. The yen reached a two-year low of around 8 against the South African rand. It is trading at the lowest levels of the year against the yuan and the Thai baht.

The yen's weakness stems partly from carry trades, which involve borrowing yen at low interest rates to invest in assets in higher-yielding currencies.

A stable market increases the appeal of carry trades by reducing the risk of a loss.

"The BOJ's decision not to tighten monetary policy until its next meeting in July has created an environment conducive to yen carry trades, at least for the next month," said Akira Moroga at Aozora Bank.

The U.S. Federal Reserve is also not expected to start cutting interest rates until at least the fall.

The carry-to-risk ratio measuring the attractiveness of yen-dollar trades rose to a three-week high of 0.61 on Monday. This also boosts the attractiveness of other trades that use dollars as an intermediary.

Political risks, like the U.S. presidential election in November, could slam the brakes on the trend. The yen strengthened by over 10% against the Mexican peso from the end of May after Mexico's general elections in June.

Source: NikkeiAsia

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Samantha Luan

Economic

Cryptocurrency

The market cap of US-listed Bitcoin [BTC] miners has climbed to a significant high, according to a recent report. Despite the rising stock prices of these miners, their revenue and reserves have been on a decline in the last few days.

Bitcoin mining stock surges in capitalization

According to analysts at JPMorgan, the market capitalization of bitcoin miners listed on U.S. exchanges hit an all-time high of $22.8 billion as of 15th June.

In the first half of June, the 14 U.S.-listed Bitcoin mining stocks surged, with Core Scientific, TeraWulf, and IREN leading the charge with gains of 117%, 80%, and 70%, respectively, as noted by JPMorgan analysts Reginald Smith and Charles Pearce.

Bitcoin miners see a decline in reserve and revenue

Glassnode’s analysis indicates that the Bitcoin miner balance has been steadily decreasing over the past few weeks. Currently, the reserve stands at approximately 1.8 million BTC, a level last observed in 2021, marking a low not seen in over three years.

This decline suggests that the volume of BTC held by miner addresses is shrinking, indicating an ongoing sell-off from these addresses.

Additionally, an analysis of BTC miner revenue indicates a downward trend in recent weeks.

Currently, revenue stands at approximately 512 BTC, a significant drop from the over 1,000 BTC observed earlier in the year.

While the recent halving event has contributed to this decline, there has also been a general decrease in revenue overall.

Bitcoin Miners See Soaring Stocks Amid Declining BTC Holdings_1

Bitcoin falls off support

An analysis of Bitcoin on a daily time frame chart revealed a 2% drop on 18th June, bringing its price to approximately $65,152.

Initially, the support level, indicated by the short moving average (yellow line), was around $66,000. However, the price decline pushed it below this support level, which has now turned into resistance.

Bitcoin Miners See Soaring Stocks Amid Declining BTC Holdings_2

At the time of writing, Bitcoin was trading at approximately $65,121 and has been unable to break through the new resistance level. The stochastic indicator corroborates the current negative trend, continuing its downward trajectory.

Additionally, a closer examination of the indicator suggests the possibility of another significant price shift soon.

Source：ambcrypto

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ING

Forex

USD: Current account data could be interesting

It has been a relatively quiet week for the dollar, where Tuesday's slightly softer-than-expected US retail sales release has not had a marked impact on rates or the dollar. Barring some major verbal intervention from the Federal Reserve, it looks as though this range-bound trading can extend into 28 June, when we see the core PCE price data for May. This should prove a mild dollar negative by supporting market expectations of a September Fed rate cut. This is only priced at a 55% probability currently.

We doubt today's US data calendar has much bearing on dollar pricing, but we will take a look at the first quarter of 2024's current account data. We wrote on this subject in early May. We concluded that the vast majority of money going into the US over recent quarters was into long-term debt securities. This serves as a reminder that whoever is in the White House come January 2025, there is no room for complacency on US debt and the kindness of strangers.

Also catching our attention today have been events in China. USD/CNH jumped in Asia when the People's Bank of China fixed USD/CNY at the highest levels of the year. Expect a few more headlines when it gets fixed above 7.1200. This comes at a time when it looks like the PBoC is reforming its money market operations and looks set to more exclusively target the 7-day reverse repo rate as its policy rate and narrow the bands around it. It looks like investors may be adding two and two and coming up with seven on the view that the PBoC will use the opportunity of money market reform to push through with a weaker renminbi. We are not looking for any substantial moves here, but we acknowledge that it will be an issue this summer and stand to keep Asian FX in general on the back foot.

Expect DXY to stay slightly bid in a 105.00 to 105.50 range today.

EUR: Still vulnerable

EUR/USD is consolidating above 1.0700 even though reasons to be cheerful are scarce. The French: German 10-year sovereign spread remains close to 80bp and despite some investors expressing that they see value in French debt here, we doubt few will want to buy ahead of the French elections later this month. The European Commission's decision announced yesterday to launch an excessive deficit procedure against France and four other countries. The eurozone calendar is light but we will get to see the European Commission's latest gauge for consumer confidence. This should rise modestly as consumers finally enjoy the benefits of some higher real wages. We favour EUR/USD staying slightly offered in a1.0700-1.0760 range today.

More interest will be had in the Swiss National Bank meeting announced at 9:30am CET. Economists are roughly split between unchanged rates and a 25bp cut. Because of the recent drop in EUR/CHF, markets are now slightly more in favour of a rate cut, attaching 70% to the prospect of one today. The mood from local corporates seems to be that the SNB will leave rates unchanged - even though EUR/CHF is below 0.95 - on the view that it will not want to give the signal with back-to-back rate cuts that the inflation battle has been won. Unchanged raters from the SNB today could send EUR/CHF down to the 0.9400/9420 area.

GBP: BoE presents downside risks to the pound today

We outline our thoughts for today's Bank of England policy meeting. In short, we think it will lay the groundwork for an August rate cut. The market currently only attaches a 31% probability to that and we therefore think sterling gets hit today. GBP/USD will probably bear the brunt of that adjustment and looks set to press 1.2650 and potentially 1.2580. EUR/GBP could trade to 0.8500.

Recall that because of the 4 July UK election, there is no press conference today. Thus, all the material - statement and minutes - will be released at 1:00pm CET.

NOK: Risks of hawkish revisions by Norges Bank

Norway’s central bank will almost certainly keep rates on hold today, and focus will be on forward-looking language and new economic projections, including the policy rate path. Underlying inflation in Norway slowed less than expected to 4.1% in May, the jobs market has remained very tight and Norges Bank had already flagged concerns for higher-than-expected wage growth at the May meeting. At the same time, NOK has appreciated by around 2.5% on a trade-weighted basis since the May meeting, lifting some pressure to keep policy tight for FX reasons.

There is a good chance that Norges Bank maintains its unchanged forward guidance, still signaling the possibility of a rate cut already in the third quarter. However, given domestic developments and the more hawkish Fed dot plots, the risks are skewed to a revision of the rate projections to the hawkish side, thereby signalling that rates will remain unchanged through the third quarter and a first move only in the fourth.

NOK remains exposed to the turmoil in EU markets due to recent political developments, and we see the likes of AUD and NZD as better positioned to benefit from further drops in USD rates in the near term. Still, a hawkish Norges Bank and NOK’s ample room to recover thanks to strong fundamentals means that the outlook remains positive for the krone once the EU political concerns have settled. A move to 11.00 in EUR/NOK before the US election event risk remains a tangible possibility in our view.

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Cohen

Economic

Commodity

About 60.6 million Americans are expected drive 50 miles (80 kilometers) or more from home from June 29 to July 7, representing a 4.8% increase from a year earlier, according to the American Automobile Association. Some 5.74 million are projected to fly over that period as well, up 6.9%. Another 4.62 million are forecast to travel by other means.

The anticipated travel boom would be a reassuring signal for crude traders who have been betting the US oil market will tighten this summer, driven by increased fuel demand. Rising US oil consumption also would help offset concerns about weak usage elsewhere, particularly in China.

Growth in travel has remained resilient in the US — even as wage growth loses steam and pandemic savings dwindle. Excursions that were once considered revenge spending have become the norm, according to AAA. Further encouraging road trips are retail gasoline prices that are currently below seasonal levels from the last two years.

“People may be willing to cut back on goods, but they’re not cutting back on experiences,” said Aixa Diaz, a spokesperson for AAA.

Rebounding air travel, in particular, has been a bright spot for fuel demand, with one measure of jet fuel consumption sitting at the highest since 2019. During the Memorial Day holiday long weekend in May, about 6% more passengers flew compared with 2023, according to JPMorgan Chase & Co. analysts, who cited Transportation Security Administration data. July Fourth Travel Seen Hitting Record in Boost for Oil Bulls_1

July Fourth Travel Seen Hitting Record in Boost for Oil Bulls_1

Gasoline demand, by contrast, is projected to be softer, as greater vehicle efficiency caps consumption growth even as Americans travel more miles. During the May holiday, gas station spending was flat year over year, according to RBC Capital Markets.

Gasoline demand looks tepid so far this summer, with peak consumption coming in at come in about 10% lower than last year, said Patrick De Haan, head of petroleum analysis at GasBuddy.

“We usually see demand peak for gasoline sometime in late July, so there’s still some opportunity,” he said, “but it does look like we are running a little bit lower than last year.”