Summary:
Robust US economic indicators and increasing gold prices redirect investor attention from Bitcoin’s potential gains.
Regulatory ambiguity and unclear US Strategic Bitcoin Reserve initiatives suppress BTC prices despite favorable macro conditions.
On Friday, Bitcoin (BTC) struggled to regain the $110,000 mark, even with traders anticipating a positive outcome following the monthly BTC options expiration. Expectations for a rally post-expiry were thwarted by a continuation of bearish trends, influenced by various challenges including macroeconomic data and a potential inquiry into publicly traded cryptocurrency treasury firms.
The US Commerce Department disclosed on Friday that the Personal Consumption Expenditures (PCE) price index increased by 2.7% in August year-over-year, aligning with economists’ predictions. Ongoing inflation remains a key factor in the US Federal Reserve’s cautious stance on reducing interest rates.
Bitcoin lags as gold approaches record highs
Traders have adjusted their forecasts, now expecting interest rates to drop to 3.75% or lower by year-end, according to futures markets.
The CME FedWatch tool indicates a 67% implied likelihood of two 0.25% rate cuts by the year’s end, a decrease from 79% just a week prior. Bitcoin traders expressed heightened frustration as gold prices surged to $3,770 on Friday, merely 0.5% away from its highest-ever level, signaling a shift toward traditional safe-haven assets amidst uncertainty.
The S&P 500 experienced gains on Friday, fueled by a reported 0.6% increase in US consumer spending for August. Economists had previously projected a slowdown in spending heading into the year-end, citing rising costs and concerns about a weakening labor market, as noted by Yahoo Finance.
A thriving US economy generally bolsters stock markets by enhancing corporate profits and lowering perceived risks, especially given escalating trade war concerns. The Trump administration recently announced another series of import tariffs, including a 100% duty on patented pharmaceuticals.
Regulatory challenges and policy inertia frustrate Bitcoin traders
In addition to macroeconomic pressures, the cryptocurrency sector has encountered its own set of challenges, further complicating Bitcoin’s price struggles.
A report from the Wall Street Journal on Thursday indicated that various cryptocurrency treasury firms have been approached by US regulators. Concerns from the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority emerged regarding unusually high trading volumes preceding corporate announcements.
Regulations prohibit public companies from selectively sharing material, nonpublic information, raising suspicions about sharp stock gains prior to related disclosures. “It’s typically the first step in an investigation. Whether it progresses fully is uncertain,” remarked David Chase, a former SEC enforcement attorney, to WSJ.
Related: Crypto markets are declining, but corporate proxies are faring even worse
Traders are increasingly frustrated by the lack of progress on the US strategic Bitcoin Reserve initiative. The Executive Order signed in March referenced “budget-neutral” approaches to accumulating Bitcoin, yet no tangible actions have been announced. Despite repeated commitments to audit the government’s cryptocurrency holdings, no tangible measures have been implemented.
In summary, Bitcoin’s price continues to encounter challenges from a favorable macroeconomic climate bolstering the stock market and rising uncertainty regarding a potential SEC investigation, coupled with the unclear status of US Bitcoin reserves.
This article is intended for general informational purposes only and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
