July 10 REX Wire Market Outlook

After an uneventful weekend, Bitcoin closed last week just below $30,200, and opens its third successive week in the $30-31k range.

Although there have been a few moves outside of that range, all were quickly bought or sold. There is demand below $30k, but traders aren't yet willing to take a risk and buy coins above $31k.

This is quite characteristic of this point in a market cycle. $30k is a strong support/resistance level, and moving above that point allows traders who have been stuck underwater for months to reduce their exposure. A significant amount of activity took place here in May-June 2021, and in May 2022.

US: Stronger Than Expected

One brief source of concern that pushed BTC below $30k was Friday's nonfarm payroll data.

The US added an impressive 209,000 new jobs in June. This print was lower than expected for the first time in a year. Analysts had forecast 230,000 jobs. However, wages were up, giving a very mixed picture. The labor market is still stronger than the Fed wants, meaning inflation is likely to stick around. The market will now be watching Wednesday's CPI print very carefully for indications on where interest rates might go next.

For now, traders are pricing in a 0.25% rise to 525-550 bps for the July 26 FOMC meeting with near certainty. The Fed has trailed at least two more rises beyond the current level of 500-525.

In the UK, the picture is worse, with stubborn inflation meaning that markets are pricing in 6.5% rates by year end. JP Morgan thinks they could go as high as 7%. Rates in the EU are 3.5%, the highest in 22 years.

Overall, global bonds yields hit their highest in 15 years as prices fell over the past week.

Bitcoin: A Strong Narrative

Despite the mixed picture in the TradFi world, the narrative for Bitcoin is compelling. The entrance of major players to the space, including BlackRock and Fidelity, has provided renewed optimism—despite the SEC lawsuits that are impacting Coinbase, Binance, and other well-known crypto organizations.

At a time when economic uncertainty is high, these giants have recognized the potential of a decentralized store of value—or, more cynically, decided to drive that narrative themselves in the search for profit. Gold has been a winner from the inflationary concerns that emerged from the COVID-prompted deluge of QE. Should BlackRock et al. succeed in positioning BTC as Gold 2.0 and bringing in a flood of new money via ETFs, that will become a self-fulfilling prophesy.

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