Key takeaways:
Robust US economic indicators and climbing gold prices are shifting investor attention away from Bitcoin’s potential gains.
Unclear regulations and ambiguous US Strategic Bitcoin Reserve proposals keep BTC prices low despite favorable macro trends.
Bitcoin (BTC) was unable to restore the $110,000 mark on Friday, even with traders’ high hopes following the monthly BTC options expiry. Expectations for a rally post-expiry were thwarted as bearish momentum prevailed, fueled by several obstacles, including macroeconomic data and a potential investigation into listed cryptocurrency treasury companies.
The US Commerce Department reported on Friday that the Personal Consumption Expenditures (PCE) price index increased by 2.7% in August compared to the previous year, aligning with economists’ predictions. Ongoing inflation is one reason the US Federal Reserve is cautious about lowering interest rates.
Bitcoin struggles to keep pace as gold approaches record highs
Traders have lowered their forecasts for interest rates to fall to 3.75% or below by year-end, based on futures market insights.
The CME FedWatch tool currently shows a 67% implied chance of two 0.25% rate cuts by year-end, down from 79% a week earlier. Bitcoin traders’ frustrations were heightened as gold surged to $3,770 on Friday, just 0.5% away from its all-time high, indicating that investors are favoring traditional safe-haven assets amid uncertainty.
The S&P 500 saw gains on Friday following reports of a 0.6% increase in US consumer spending for August. Economists had previously predicted a downturn in spending towards the year’s end due to rising prices and concerns about a weakening labor market, according to Yahoo Finance.
A strong US economy typically bolsters stock markets by driving corporate profits and reducing perceived risk, particularly amid rising concerns regarding the trade war. The US administration has imposed new import tariffs, including a 100% duty on patented pharmaceuticals.
Regulatory challenges and policy delays frustrate Bitcoin traders
In addition to macroeconomic issues, the cryptocurrency market has encountered its own set of challenges, adding to Bitcoin’s price struggles.
A report from the Wall Street Journal on Thursday indicated that several cryptocurrency treasury firms had been approached by US regulators. The SEC and the Financial Industry Regulatory Authority have reportedly expressed concerns regarding unusually high trading volumes before corporate announcements.
Regulations prevent public companies from selectively disclosing material, nonpublic information, raising suspicion over sharp gains in certain public stocks shortly before related disclosures. “It’s typically the first step in an investigation. Whether it goes full, full length, it’s anybody’s guess,” stated David Chase, a former SEC enforcement attorney, to WSJ.
Related: Crypto markets are down, but corporate proxies are doing far worse
Traders are increasingly exasperated by the stagnation in the US strategic Bitcoin Reserve initiative. Despite the Executive Order from March referencing “budget-neutral” strategies for accumulating Bitcoin, no concrete actions have materialized. Repeated assurances to audit government cryptocurrency holdings have yet to yield results.
Ultimately, Bitcoin’s price is under continued pressure from a favorable macroeconomic environment supporting stock markets and growing uncertainty surrounding a potential SEC investigation and the ambiguous status of US Bitcoin reserves.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
