Why Bitcoin’s resistance to retesting the $25K support could be futile
Bitcoin has been trading in a narrow 3.4% range for the past three days after successfully defending the $25,500 support on June 10. In this time, investors’ attention has shifted to the macroeconomic area as the United States Federal Reserve will announce its interest rate decision on June 14.
Cryptocurrencies might work independently from the traditional finance markets, but the cost of capital impacts almost every investor. Back in May, the Fed raised its benchmark interest rate to 5–5.25%, the highest since 2007.
All eyes will be on Fed Chair Jerome Powell's media speech 30 minutes after the rate announcement as markets are pricing in 94% odds of a pause at the June meeting, based on the CME FedWatch tool.
The upcoming Federal Open Market Committee meeting isn’t the only concern for the economy, as the U.S. Treasury is set to issue more than $850 billion in new bills between now and September.
Additional government debt issuance tends to cause higher yields and, thus, higher borrowing costs for companies and families. Considering the already-restrained credit market due to the recent banking crisis, odds are that gross domestic product growth will be severely compromised in the coming months.
According to on-chain analytics firm Glassnode, miners have been selling Bitcoin (BTC) since the start of June, potentially adding further pressure to the price. Among the potential triggers are reduced earnings from a cooldown in Ordinals activity and the mining hash rate reaching an all-time high.
Investors now question whether Bitcoin will test the $25,000 resistance, a level unseen since mid-March, and for this reason, they are closely monitoring Bitcoin futures contract premiums and the costs of hedging using BTC options.
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