Bitcoin (BTC) saw a reduction in its gains on July 27 as the release of United States macroeconomic data had a muted impact on the cryptocurrency. According to data from Cointelegraph Markets Pro and TradingView, BTC’s price strength weakened after briefly reaching $29,680 before the daily close.
The increase in BTC’s price came after the Federal Reserve raised interest rates to their highest level since 2001, a move that was already expected by the market. However, the release of the U.S. gross domestic product (GDP) data for the second quarter showed better-than-expected annualized growth of 2.4%. This indicated that inflationary pressures were continuing to ease, potentially affecting the performance of risk assets.
Interestingly, Bitcoin did not show a noticeable reaction to this data, and stocks also remained fairly flat after the Wall Street open. This led Michaël van de Poppe, the founder and CEO of trading firm Eight, to hope that the release of the Personal Consumption Expenditures (PCE) Index on July 28 would provide a more tangible incentive for growth. He suggested that if the GDP data was worse than expected, market drops would occur, but the positive GDP result may lead to a rise in Bitcoin and stocks.
However, van de Poppe also warned that BTC/USD could experience a dip before any potential rise, with a key support level forming at $29,700. On-chain monitoring resource Material Indicators also suggested that the GDP data would have little impact on the cryptocurrency market, referring to it as a “nothingburger” for crypto. The accompanying BTC/USD order book chart from Binance showed thin support above $28,500, which could ease a potential market drop.
Meanwhile, the release of the GDP data did not significantly impact market expectations for the Federal Reserve’s future policy. According to CME Group’s FedWatch Tool, the odds of rates pausing at their current level stood at 76%, with a 24% likelihood of a 0.25% increase in the next interest rate decision in September. Commenting on the potential impact of U.S. macro movements on crypto, financial commentator Tedtalksmacro referred to the rate hike event as “very vanilla” and noted that BTC and U.S. equities were higher in response.
One notable reaction to the GDP data was the strength of the U.S. dollar, which saw a spike on July 27 and reached its highest level since July 11. The U.S. Dollar Index (DXY) also bounced back from its lowest levels in over a year. This increase in dollar strength traditionally acts as a headwind for crypto markets.
In conclusion, Bitcoin’s price gains were reduced on July 27 despite positive GDP data and a rate hike by the Federal Reserve. The lack of a significant reaction from BTC to the data, along with the strength of the U.S. dollar, indicates that market sentiment remains cautious. Traders and investors will be closely monitoring future macroeconomic data for potential catalysts to drive further market movements.
Please note that this article does not provide investment advice, and readers should conduct their own research and analysis before making any investment decisions.