The iShares Bitcoin ETF (IBIT), Fidelity Wise Origin Bitcoin Fund (FBTC), and Grayscale Bitcoin Trust (GBTC) will be in the spotlight this week as the Federal Reserve delivers its closely watched decision.
IBIT was trading at $39.40 on Friday, a few points below last week’s high of $41 as Bitcoin failed to blast above $72,000. Similarly, the GBTC ETF was trading at $61.40 while Fidelity’s FBTC retreated to $60.
Federal Reserve decision ahead
These ETFs have done well in the past few weeks as their inflows jumped. Data shows that Blackrock’s IBIT has accumulated over 302k coins currently valued at over $20.8 billion. FBTC has over 173,759 coins valued at $11.9 billion while GBTC has 285,650 coins with a market cap of more than $19.7 billion. All spot Bitcoin ETFs hold 881,101 coins worth almost $61 billion.
The main catalyst for these ETFs will be Wednesday’s Federal Reserve interest rate decision. While the Fed is not expected to slash interest rates in this meeting, the dot plot will provide a clearer picture of when to start these cuts.
The rate decision comes at an important period in the market. In Europe, the European Central Bank (ECB) delivered a hawkish cut last week. The Bank of Canada also became the first G7 central bank to cut rates in its June meeting.
At the same time, the US has published mixed economic data. The jobs report by the Bureau of Labor Statistics (BLS) revealed that the economy created over 272k jobs in May while wage growth accelerated. Also, the unemployment rate rose to 4.0%.
A separate report by the ISM showed that the manufacturing PMI dropped to 48 in May, meaning that the sector is contracting. Therefore, the Fed will likely ask for patience since inflation also remains significantly above its target of 2.0%.
Bitcoin and other risky assets tend to underperform when there is a hawkish Fed. For example, the coin tumbled below $70,000 last week after the strong NFP data. US equities also dropped, with the Dow Jones and S&P 500 falling by over 50 basis points. The US dollar index (DXY) rose to $104.50.
Bitcoin price outlook
IBIT, FBTC, and GBT ETFs are the best Bitcoin proxies, meaning that their prices always move in sync. On the daily chart, we see that the BTC price has remained in a tight range in the past few weeks. After soaring to near $72,000 last week, Bitcoin retreated and was trading at around $69,000 on Monday.
It has remained above the 50-day and 10-day Exponential Moving Averages (EMA), which is a positive thing. However, it has also formed a small double-top pattern at $71,870. In most cases, this is a popular bearish sign in the market. It has also formed a small bearish flag on the 4H chart.
Therefore, the short-term outlook for Bitcoin is bearish unless bulls push it above the double-top level at $71,870. On the positive side, Bitcoin has also formed an inverse head and shoulders pattern, which could push it higher. As reported last week, Mike Novogratz has predicted that Bitcoin will move to over $100k if it moves above this year’s high of $73,653.
