US economic data paints a positive landscape for Bitcoin, experts say

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US Gross Domestic Product (GDP) figures rose 1.4% quarter-on-quarter, meeting market expectations. Additionally, core Personal Consumption Expenditure (PCE) inflation fell to 2.6%, also meeting analyst predictions. A third important market data was unemployment claims, as initial claims came in below estimates, while continuing claims came in above expectations. Experts shared with Crypto Briefing that this paints a positive picture for cryptocurrencies.

Jag Kooner, head of derivatives at Bitfinex, explains that slowing GDP growth suggests a potential economic cooling, and this could impact investor sentiment. Consequently, this shift in sentiment 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 downturns, investors often turn to Bitcoin as a store of value,” Kooner added.

Ben Kurland, CEO of DYOR, also sees stable GDP growth as an indicator of perceived stability, which could help the cryptocurrency market as investors feel less of a need to move capital out of riskier assets.

“However, rising unemployment claims introduce some uncertainty, which could dampen investor sentiment. Overall, the cryptocurrency market is likely to remain volatile, balancing the stability of traditional markets with a cautious sentiment,” Kurland said.

Additionally, slightly better initial job applications could indicate greater economic stability, which is typically good for the crypto space, according to Marko Jurina, CEO of Bridge.Exchange“If it's not good, at worst it's neutral,” he added.

Jurina also highlights that GDP figures show that the US economy is slowing and that high interest rates could be taking their toll. “I bet the Fed will start cutting rates before September to help boost the economy.”

In particular, the current uncertainty could impact inflows into spot Bitcoin exchange-traded funds (ETFs) as investors seek safe haven assets rather than risk assets, as Kooner noted. “Whether BTC takes a bid based on that remains to be seen.” Moreover, the expected resumption of the bull market could further amplify these flows.

“Historically, during periods of economic downturn or uncertainty, Bitcoin has experienced a negative correlation with stocks and has shown strength as stocks weaken. An important consideration is that the resumption of the uptrend in cryptocurrency bull markets typically begins 10 to 12 weeks after the halving; As we move into July and the third quarter, we are approaching that point with a very important bullish catalyst in the form of Ethereum. “ETFs go live,” added the Bitfinex Head of Derivatives.

Heading into July, investors should watch for a return of volatility in both traditional and cryptocurrency markets, with regulatory developments and macroeconomic policies playing 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. Statements from the Fed and a possible continuation of a more hawkish stance are important factors to keep in mind," Kooner concluded.

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