Positive market sentiments have emerged in both global stock and crypto markets following the US House and Senate’s Biden-McCarthy Debt Ceiling Deal and the U.S. Federal Reserve’s decision to potentially skip an interest rate hike in June. Notably, the Dow Jones rose by 2.1%, the S&P 500 by 1.4%, and the Nasdaq recorded almost a 1% gain.
Despite this overall positive market trend, risks still exist, particularly for more volatile assets such as cryptocurrencies. After the passing of the debt ceiling deal, the US Treasury Department is planning to rebuild its cash balance by issuing an estimated $1 trillion in Treasury bills. This move will likely drain US dollar liquidity from the financial market and could increase the chances of a recession.
Citigroup strategists forecast that the near-term outlook for Bitcoin (BTC) and Ethereum (ETH) remains bleak as Treasury General Account cash reserves plunged to $22.89 billion in June from $635.99 billion in March. The current macroeconomic backdrop is relatively uncertain, which spells trouble for the crypto market.
According to Fiona Cincotta, a senior market analyst at City Index, Bitcoin’s support is around the $26,500 mark but breaking below $25,000 could result in a crash. One crucial factor in stimulating a Bitcoin resurgence may be a dovish shift from the Federal Reserve, leading to a significant leg higher.
Over the past month, both Bitcoin and Ethereum prices have moved within a specific range, driven by numerous factors such as macroeconomic conditions, regulatory challenges, and weak technical charts. The BTC price currently stands at roughly $27,150, stable within the past 24 hours, while the ETH price has risen above $1,900 but still faces selling pressure.
It’s important to remember that this market analysis reflects the personal opinions of the author and is affected by market conditions. Always conduct thorough market research before investing in cryptocurrencies, as neither the author nor the publication holds any responsibility for personal financial losses.
Source: Coingape
