The cryptocurrency market is closely watching the performance of Bitcoin (BTC) as it navigates the current economic landscape. With the release of stronger-than-expected employment data in the United States, investors are closely monitoring the potential impact on Bitcoin’s price and the possibility of it closing above the $70,000 mark. Additionally, the European Central Bank’s recent interest rate cut could also influence the demand for Bitcoin and other cryptocurrencies.
Bitcoin’s Price Faces Pressure from Strong Labor Market
The nonfarm payrolls report, released on June 7, revealed that the number of people employed in the United States, excluding the farming industry, exceeded expectations. This robust employment data could signal a stronger economy, leading to concerns about tightening monetary policy. According to Bitfinex analysts, this could put downward pressure on Bitcoin’s price as investors rebalance their portfolios towards traditional assets, potentially resulting in a weekly close below the $70,000 mark.
The nonfarm payrolls report showed that over 272,000 new jobs were created, surpassing the previous estimate of 182,000. This stronger-than-expected performance could prompt the Federal Reserve to continue its aggressive interest rate hikes, which could negatively impact the appetite for risk assets like Bitcoin.
ECB’s Interest Rate Cut: A Potential Boost for Bitcoin?
In a significant macroeconomic development, the European Union became the second major economy to cut interest rates this week, following Canada. The European Central Bank (ECB) has reduced its benchmark lending rate from 4% to 3.75%, marking the central bank’s first interest rate cut in five years.
According to Bitfinex analysts, this rate cut could potentially weaken the euro, leading to higher demand for alternative assets like Bitcoin. The increased liquidity from this monetary easing could also support risk assets, including cryptocurrencies, potentially providing a boost to Bitcoin’s price.
Can Bitcoin ETF Inflows Push BTC Above $70,000?
Bitcoin has been trading mostly flat on the daily chart, but the positive institutional inflows from the United States spot Bitcoin exchange-traded funds (ETFs) could help BTC close the week above the crucial $70,000 mark.
So far this week, the U.S. spot Bitcoin ETFs have amassed over $1.54 billion worth of cumulative net inflows. Based on the current inflows, the ETFs are set to amass 3.74% of Bitcoin’s supply every year, according to Dune data. The strong inflows, with $488.1 million on June 5 and $886.6 million on June 4, could provide the necessary support for Bitcoin to close the week above $70,000.
By February 15, Bitcoin ETFs had accounted for about 75% of new investment in the world’s largest cryptocurrency as it surpassed the $50,000 mark. The continued institutional interest in Bitcoin, as evidenced by the ETF inflows, could be a crucial factor in determining whether BTC can close above the $70,000 level.
