Bitcoin Bulls Put On Defensive Amid Fears Of “Damaging” Inflation and Job Data This Month
June 1, 2023- Bitcoin has slipped below $27,000 to end May in the red zone as wider market factors stifle the expectations of bullish investors.
- Loretta Mester, a Federal Reserve official, shares her opinion on potentially negative job and inflation data.
- Observers suggest that investors should brace for a slight downturn in the market outlook as the Feds will resume tightening liquidity if the debt ceiling is raised.
The digital asset market recorded slight gains last week but faces a huge test following macroeconomic factors, including inflation concerns, and reduced liquidity following the lifting of the debt ceiling.
May is officially Bitcoin’s (BTC) worst-performing month since the collapse of FTX in Nov 2022, putting investors in a risky position. BTC plunged by 7.3% in the last 30 days while the wider crypto market declined 5%, although some positives were recorded in altcoins.
Adding to the woes of BTC, a job report set to be released this week may wipe off little gains in the market. Loretta Mester, the President of the Federal Reserve Bank of Cleveland, stated in an interview with Financial Times that there is not enough evidence to pause the hikes in interest rates.
“I don’t see a compelling reason to pause, meaning wait until you get more evidence to decide what to do.”
Stressing that the Feds must do more to tackle inflation, her comments rattled traders dragging the market leader below $27,000. Furthermore, a report from the Jobs Opening and Labour Turnover (JOLTS) showed an increase in openings from 9.3 million to 10.01 million, justifying Mester’s arguments of a tight labour market.
There have been reports that the Feds could eventually pause the hike in interest rates with inflation cooling after ten previous hikes.
Market leaders not fazed by price drop
The recent negatives recorded by BTC and other top assets have rattled traders, but several industry executives suggest that the major drivers of BTC are waxing strong. Michael Silberberg of Alt Tab Capital noted that institutional investors are still attracted to the volatility in Bitcoin.
“This is a highly volatile market, which is one of the traits that attract institutional investors in the first place.”
Similarly, Mikkel Morch, an executive at Ark36, is not perturbed by the current macroeconomic effects on the market, adding that institutional interest and adoption point higher.
“While short-term volatility persists due to the Federal Reserve’s tightening measures and ongoing global economic uncertainties, our stance at ARK36 remains bullish on Bitcoin for the long term,” he explained.
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