Market Remains Bearish Despite Positive Economic Indicators as Bitcoin Hits Two-Week Low
Bitcoin (BTC) experienced a notable retreat, descending to a two-week low of $62,600 after a robust start earlier in the week.
As of the latest data, Bitcoin has dropped by 5.5% over the past 24 hours, while Ether (ETH) has fallen by 5.8%, Solana (SOL) by 10%, and XRP (XRP) by 10%. This downturn comes despite Bitcoin recently hitting a four-month peak just above $70K. The U.S. economic data released Thursday seemed favorable at first glance: the July ISM Manufacturing PMI fell significantly more than economists had predicted, leading to multi-month lows in interest rates. Additionally, U.S. initial jobless claims surged to their highest level in about a year. These indicators typically suggest the potential for a monetary easing cycle by the Federal Reserve, which is generally seen as bullish for risk assets, including Bitcoin.
Fed Chairman Jerome Powell, speaking after the latest policy meeting, hinted that a rate cut in September is a distinct possibility if the data continues to indicate slowing economic growth and inflation.
In parallel, the Bank of England joined the monetary easing trend initiated earlier in 2024 by the Bank of Canada and the European Central Bank, reducing its benchmark lending rate for the first time in four years.
On a broader scale, Bitcoin's surge to $70,000 on Monday was fueled by the enthusiasm from the Bitcoin 2024 conference in Nashville and GOP nominee Donald Trump's commitment to support Bitcoin, including the possibility of the government holding the cryptocurrency as a strategic asset.
However, Bitcoin enthusiasts must now contend with the evolving political landscape. Trump's previously strong victory prospects have diminished from 70% to 55% in just two weeks, as new Democratic nominee-apparent Kamala Harris' odds have climbed to 44%, according to Polymarket. It remains uncertain whether a Harris administration would approach Bitcoin and crypto regulation with the same intensity as the Biden administration, but the likelihood of a crypto-friendly presidency in 2025 appears to have decreased.