Bitcoin's Gamble: Market Awaits Fed's Next Move as Rates Loom

Is Bitcoin still the hedge we thought it was? The crypto market is buzzing after Bitcoin dropped to $61,100, driven by a surprisingly strong jobs report that could delay rate cuts until 2027.

The Raw Data

to the numbers. Bitcoin is down 3% over 24 hours and has seen a 6.9% drop over the week. Gold didn't fare better, falling 2% to below $4,200 an ounce. This synchronized sell-off challenges the idea that Bitcoin and gold can effectively hedge against economic shifts.

The catalyst? A high-stakes jobs report. May saw 172,000 non-farm payrolls, beating market expectations of 130,000. April's figures were revised up to 214,000. This labor data has markets reevaluating their stance on interest rates.

Why It Matters

Historically, Bitcoin and gold have been seen as safe havens, particularly when traditional markets wobble. But here's the twist: as real yields rise and the dollar strengthens, demand for these non-yielding assets dwindles. According to Cleveland Fed President Beth Hammack, the Fed may need to act soon if inflation doesn't cool.

Wall Street is on edge. The 10-year Treasury yield jumped to 4.54%, while oil prices near $92 a barrel complicate the Fed’s calculus. New Fed Chair Kevin Warsh faces a essential decision at the upcoming FOMC meeting on June 17-18.

Insider Views and Market Sentiment

Traders are watching this space closely. Diana Pires from sFOX noted that while buyers entered after Bitcoin's dip, spot demand hasn't returned significantly. The market's current focus is whether Warsh will hold rates or signal a hike. If rates increase, non-yielding assets like Bitcoin and gold could face further pressure.

Bitcoin ETFs are feeling the strain, with record outflows keeping institutional money at bay. The dip-buyer narrative is weakening, eroding the confidence that held prices above $70,000 earlier this year.

What's Next?

What does this all mean for Bitcoin and gold investors? Immediate support for Bitcoin sits between $55,000 and $58,000, the pre-breakout levels from mid-2024. A rally to $64,000 to $65,000 is essential for any meaningful recovery.

As we approach the FOMC meeting, a hold with dovish language could trigger a relief rally for both Bitcoin and gold. But if Warsh signals a hike, expect a test of these support levels. This is what onboarding actually looks like in a volatile market.

The builders never left, but they've got their work cut out for them. Are you ready for what comes next?