The release of higher-than-expected inflation data in the past caused Bitcoin prices to drop and created uncertainty about potential rate cuts by the US Federal Reserve. The Fed’s history of increasing interest rates has led to higher bond yields since bonds are considered safer with potentially higher returns.
In May 2024, US employers added 272,000 jobs, surpassing economists’ expectations. However, the unemployment rate has risen for two consecutive months. This suggests ongoing strength in the job market, which supports the broader economy and consumer spending. Yet, it has posed a challenge for the Federal Reserve in determining future interest rates.
As a result of these events, the Bitcoin price suffered a sharp decline, erasing most of its weekly gains and dropping from over $70,000 to below $67,000 early today. This significant decrease occurred amidst a broader selloff in the crypto market following the release of robust US job data.
Bitcoin ETF inflows as a factor
One week ago, US spot bitcoin ETFs realized their second-highest net inflows per day, amounting to $886.6 million. However, even that could not keep the Bitcoin price above $70,000. According to analysts, commodities traders and hedge funds are engaging in price arbitrage by purchasing ETFs and selling CME Bitcoin futures.
Market observers are keeping their eyes out for CPI data and Fed chair Jerome Powell’s comments for cues on when the Fed might reduce rates.
When spot Bitcoin ETFs started trading in January, traders were bullish, and the huge inflows powering a Bitcoin price rally. With traders now wagering on arbitrage, that trend may be changing. According to research, the entities engaging in arbitrage aim to profit from the futures market premium.
Bitcoin price prediction
Bitcoin’s price dropped from its weekly peak of around $72,000, and bulls are working hard to maintain support above $67,000. It has dropped by 2.50% in the past seven days. Despite not breaking through the overhead resistance, buying interest remains steady.
Investor data shows inflows of around $1.7 billion into spot Bitcoin ETFs this week, with total investments in the ETFs amounting to $15.5 billion on June 6. Analysts believe this strong buying indicates that people expect the upward trend to continue.
