Bitcoin stabilized at around $84,000 on Friday after rising 2% at the beginning of the week. This stability comes after the US Securities and Exchange Commission (SEC) confirmed that Proof-of-Work mining rewards are not securities, boosting investor confidence. Additionally, the US Federal Reserve’s decision to keep interest rates steady contributed to market stability.
The US Securities and Exchange Commission’s role in supporting the market
The US Securities and Exchange Commission (SEC) announced that Bitcoin mining rewards are not considered securities. This announcement provides investors with regulatory clarity and reduces the legal risks associated with investing in cryptocurrencies. This indicates that individual miners and mining pools will not face legal challenges from US regulatory authorities. This announcement therefore reinforces Bitcoin’s status as a commodity and could positively impact market prices.
Boosting investor confidence in major institutions
This week has seen a return to institutional demand for Bitcoin. According to Coinglass data, Bitcoin ETFs recorded net inflows of $661.20 million. These inflows halted the downward trend Bitcoin had experienced in recent weeks, indicating a potential market recovery. If this inflow continues, we could see a rise in Bitcoin’s price, especially if demand from major institutions intensifies.
Economic Data and Market Outlook
In the same week, Bitcoin’s price rose 5%, reaching a record high of $87,000. This came after the Federal Reserve decided to keep interest rates steady and maintain expectations of future rate cuts. These decisions support the overall economy, boosting the value of crypto assets. At the same time, economic uncertainty is increasing due to US President Donald Trump’s trade policy, which has impacted markets across the board.
Trade Tensions and the Impact on the Global Economy
Since February, Trump has imposed 25% tariffs on steel and aluminum, and announced new tariffs starting in April, raising the prospect of a global trade war. Earlier this week, Truth Social published a post from Trump calling on the Federal Reserve to lower interest rates, arguing that tariffs negatively impact the US economy.
With trade tensions rising, we see a slight improvement in global uncertainty. Russian President Vladimir Putin agreed with Trump to halt attacks on energy infrastructure in the Ukraine conflict. Zelensky and Trump also discussed ways to end the war between Russia and Ukraine, boosting investor confidence in cryptocurrencies.
Political Rhetoric and Its Impact on Bitcoin
During the Blockworks Digital Asset Summit in New York, Donald Trump delivered the first speech by a US president at a cryptocurrency conference. In the speech, he called for strengthening the dominance of the US dollar in the cryptocurrency market, noting the need to make America a cryptocurrency superpower. Bitfinex analysts also noted that this speech represents a historic turning point in the relationship between politics and cryptocurrencies, as Trump’s statements have impacted Bitcoin prices in the past.
Bitcoin Price Forecast and Technical Impact
Technically, Bitcoin broke through its 200-day exponential moving average (EMA), reaching $87,000. However, the price failed to find support at this level and fell 3% on Thursday. At the time of writing, Bitcoin continues to decline, approaching $84,000.
The Relative Strength Index (RSI) on the daily chart shows that the price is on a downward trajectory, reaching 45, after dipping below 50 on Wednesday. If this trend continues, Bitcoin could decline significantly. Conversely, if Bitcoin regains support around the 200-day EMA, we could see a recovery that could push the price to test $90,000.
Awaiting Inflation Data and Its Impact on the Market
Inflation data is one of the key factors closely monitored by markets, especially during times of economic uncertainty. The US Personal Consumption Expenditures (PCE) data is scheduled to be released on Friday, one of the key indicators the Federal Reserve (Fed) relies on to determine its interest rate policy.
This indicator is pivotal for investors because it reflects the cost of living and the impact of inflation on the US economy. If the data shows that inflation remains high, the Fed may be forced to make decisive decisions regarding raising interest rates, which could have a negative impact on financial markets.
The Impact of Inflation on Fed Policy:
If inflation data is higher than expected, the Fed may be forced to take further action to curb inflation, such as raising interest rates. Although the Fed may expect to cut interest rates in the future to support economic growth, persistently high inflation could influence its future decisions.
The Impact of Inflation on the Cryptocurrency Market:
Price inflation can lead to increased pressure on riskier assets such as Bitcoin and other cryptocurrencies. If interest rates rise, the market may see a decline in investment flows into crypto assets due to higher borrowing costs, leading to a decline in demand for these assets.
On the other hand, if data shows a decline or stabilization of inflation, this could create a more stable environment, boosting investor confidence in the market. We may then see a recovery in cryptocurrencies, including Bitcoin, with confidence in riskier assets restored.
Altcoins Decline Amid Market Decline
Among altcoins, most recorded significant declines, with Ethereum falling 4.8% and Polygon falling 9%. XRP and Solana also fell 4.2% and 3%, respectively. In contrast, Dogecoin fell 6.2%, while $TRUMP fell 8%.
