Bitcoin witnessed a surge in price following the release of the United States Gross Domestic Product (GDP) figures for the first quarter of fiscal 2024. The GDP rose by 1.3%, surpassing Wall Street’s anticipations of a 1.2% increase. This positive economic signal has boosted investor sentiment, impacting financial markets, including the cryptocurrency sector.
BTC/USD 24-hour price chart (source: CoinMarketCap)
The positive revision of the GDP data followed an initial estimate that showed a growth rate of 1.6% for the same quarter, after a previous high of 3.4% in the final quarter of 2023. Despite this slowdown, the better-than-expected revision was enough to catalyze a bullish reaction in Bitcoin’s price as traders reacted to the economy’s overall health.
Market Response to Macroeconomic Indicators
The initial market reaction saw Bitcoin climbing to $68,673.14, significantly recovering from its 24-hour low of $67,101.49. This price movement underscores the cryptocurrency’s sensitivity to macroeconomic indicators influencing traditional financial markets.
The increase in Bitcoin’s price coincides with a decrease in the U.S. 10-year bond yield by 0.99% to $4.577 and a drop in the U.S. Dollar Index Futures by 0.25% to $104.770, reflecting a shift in investor preferences toward riskier assets.
WE GOT A TON OF ECONOMIC DATA JUST NOW:
US Q1 GDP 1.3% vs. 1.3% estimated
GDP Price Index Q1 3.1% vs. 3.1% estimated
Core PCE Prices Q1 3.6% vs. 3.7% estimated
Initial Jobless Claims: 219K vs. 218K estimated
Not too bad…
Core PCE coming in lower than expected 🟢
More… pic.twitter.com/IySfwOYZuN
— amit (@amitisinvesting) May 30, 2024
In addition to the GDP data, the market paid close attention to other economic releases, including weekly jobless claims. The U.S. Labor Department reported a slight increase in jobless claims, up by 3,000 to 219,000 last week, slightly above market estimates. Despite this increase, the labor market’s strength remains intact, supporting the economy and financial markets, including cryptocurrencies.
Trading Volume and Market Sentiment
While Bitcoin’s price has shown volatility, the overall trading volume noted a decline, with a 7.03% decrease bringing the total to $27 billion. This decrease in volume suggests that while prices have increased, the trading momentum may need additional support for the rally to sustain itself.
Additionally, the crypto market’s sentiment has leaned towards greed, with the Fear & Greed Index reaching 73, indicating that investors are becoming increasingly optimistic about potential gains.
Bitcoin Fear and Greed Index is 73. Greed
Current price: $68,056 pic.twitter.com/RcXsV2wLBF— Bitcoin Fear and Greed Index (@BitcoinFear) May 30, 2024
Investors and traders are now looking toward the upcoming U.S. Personal Consumption Expenditures (PCE) inflation data, which the Federal Reserve closely monitors. This data is crucial as it could influence the Fed’s policy decisions in the coming months. According to the CME FedWatch Tool, there is currently a 98.9% likelihood that the Federal Reserve will maintain interest rates at its next meeting on June 12.
As the market digests these macroeconomic developments, traders’ strategic positioning will be key. Analysts suggest that setting stop-loss orders near recent support levels and monitoring for potential resistance at higher price points could be prudent. The influx of new data will likely continue to drive market dynamics, making it essential for participants to stay informed and agile in their trading strategies.
