Bitcoin Faces Pressure from US Inflation and Trade News
XRP responded positively to Ripple’s latest announcement, but the demand for Bitcoin (BTC) experienced some setbacks due to recent US inflation data and tariff developments. The US Core PCE Price Index rose by 2.7% annually in May, up from 2.6% in April, creating speculation about a possible cut in the Fed’s rate in Q3. The CME FedWatch tool places the probability of a rate cut in September somewhere between 93.2% and 92.5%.
The data released on Friday might indicate the initial effects of tariffs on inflation, lending support to Fed Chairman Powell’s calls for a cautious policy approach.
However, unexpected trends in personal income and expenditures somewhat mitigated the inflation impact on potential Fed rate cuts. Personal income dipped by 0.4% in May while it had increased by 0.7% in April; likewise, personal spending fell by 0.1% compared to a 0.2% increase in April. These lower figures might suggest a softer inflation outlook.
President Trump’s recent announcement about concluding trade talks with Canada has altered market sentiment. On June 27th, he stated:
“(Canada) has announced that it is putting a digital service tax on American technology companies, a direct and blatant attack on our country. They are clearly copying the European Union that did the same thing and are currently being discussed with us. Based on this terrible tax, we will soon close all discussions about our dealings with Canada.”
Trump also indicated that tariffs on Canadian goods would be announced within the next week. Heightened trade tensions have previously seen BTC drop from record highs of $111,917 to around $100,424.
US Bitcoin ETF Market Experiences 14-Day Inflow Streak
Despite various market difficulties, the US Bitcoin Spot ETF floor trend has continued to bolster BTC prices. According to Farside Investors, notable inflows for June 27 included:
- The Fidelity Wise Origin Bitcoin Fund (FBTC) recorded a net inflow of $165.5 million.
- ARK 21Shares Bitcoin ETF (ARKB) noted a net inflow of $150.3 million.
- Bitwise Bitcoin ETF (BITB) saw a net inflow of $11.6 million.
Data for the BlackRock (BLK) iShares Bitcoin Trust (IBIT) is still pending, bringing total US BTC spot ETF inflows to $344.5 million. Notably, the US BTC spot ETF market is on track to increase its net inflow streak to 14 days.
The introduction of the BTC spot ETF has played a significant role in price fluctuations and has heightened interest from mainstream companies.
“We’re looking forward to seeing you in the future,” commented Eric Bulknath, a senior ETF analyst at Bloomberg Intelligence.
“Regarding Bitcoin’s volatility, the ratio of IBIT’s 60-day volatility to SPX shows that it’s now only about the same as US stocks, compared to being 5.7 times more volatile a year ago.”
BTC Price Outlook: Trade News, US Inflation, and ETF Movements
On June 27, BTC saw a modest increase of 0.15%, recovering slightly from a 0.39% loss the previous day, closing at approximately $107,130.
Looking ahead, the short-term price direction will likely hinge on key factors like signals around Fed rate cuts, trade developments, and ETF inflows, particularly considering the situation between Iran and Israel.
Possible scenarios include:
- Bearish Scenario: Increased tensions in the Middle East, legislative hurdles, renewed trade disputes, hawkish signals from the Fed, and ETF leaks could push BTC down to its 50-day exponential moving average (EMA) and test the $100,000 mark.
- Bullish Scenario: If there’s a sustained ceasefire between Iran and Israel, collaborative support for crypto legislation, decreased trade tensions, and ETF inflows, BTC could make its way back to previous highs around $111,917.
