The US Gross Domestic Product (GDP) numbers rose by 1.4% quarterly, meeting market expectations. Additionally, the Core Personal Consumption Expenditures (PCE) inflation fell to 2.6%, also meeting analysts predictions. A third important market data was the jobless claims, as the initial claims came below the estimates, while the continuing claims went above the expected. Experts shared with Crypto Briefing that this paints a positive landscape for crypto.
Jag Kooner, Head of Derivatives at Bitfinex, explains that the slowdown in GDP growth suggests a potential economic cooling, and this could impact investor sentiment. Consequently, this sentiment shift may lead to increased interest in Bitcoin and other digital assets as alternative investments, particularly if traditional markets show signs of weakening.
“Historical trends indicate that during economic slowdowns, investors often turn to Bitcoin as a store of value,” added Kooner.
Ben Kurland, CEO of DYOR, also sees the stable GDP growth as an indicator of perceived stability, which might help the crypto market as investors feel less need to move capital out of riskier assets.
“However, the higher continuing jobless claims introduce some uncertainty, potentially tempering investor confidence. Overall, the crypto market will likely continue to be choppy, balancing stability in traditional markets with cautious sentiment,” said Kurland.
Moreover, the initial jobs claims coming in slightly better could indicate more economic stability, which is normally good for the crypto space, according to Marko Jurina, CEO of Jumper.Exchange. “If not good, neutral at worst,” he added.
Jurina also highlights that the GDP numbers show that the US economy is slowing down and high interest rates might be taking their toll. “My bet here would be that the FED will start cutting rates by or before September to help bolster the economy.”
Notably, the current uncertainty might impact the inflows of spot Bitcoin exchange-traded funds (ETFs), as investors seek safe-haven assets over risk assets, as pointed out by Kooner. “It remains to be seen if BTC catches a bid based on that.” Furthermore, the anticipated resumption of the bull market could further amplify these flows.
“Historically, during periods of economic downturn or uncertainty, Bitcoin has seen a negative correlation with equities, and shown strength as equities weakent. An important consideration is that a resumption of uptrend in crypto bull markets typically starts within 10-12 weeks from the halving, as we move into July and Q3, we get closer to that point with a very important bullish catalyst in the form of the Ethereum ETFs going live,” added the Head of Derivatives at Bitfinex.
Looking ahead to July, investors should watch for a comeback in volatility in traditional markets and crypto alike, and regulatory developments and macroeconomic policies will play a crucial role in shaping market dynamics.
“Another key point to note is that the Fed Funds futures data suggests that the market is still expecting and pricing in two rate cuts in 2024. The Fed’s statements and a possible continuation of a more hawkish stance are important factors to watch,” concluded Kooner.
