- Macroeconomic challenges continue to limit Bitcoin's growth


On the macroeconomic front, bets on a Federal Reserve rate hike continue to limit risky assets.

U.S. Personal Consumption Expenditures data, released on Thursday, showed growth accelerating to 4.1% year-over-year in May, compared to 3.8% the previous month. The core index, which excludes volatile food and energy prices, also rose 3.4% over the same period, up from 3.3% in April.

Investors believed that inflation had peaked last month or was about to, given the recent decline in crude oil prices to pre-war levels following the temporary peace agreement between the United States and Iran. However, improved inflation expectations did little to support Bitcoin, which continued its decline this week.

According to the CME Group's FedWatch tool, market participants still see a probability exceeding 60% that the U.S. central bank will raise borrowing costs by September, which continues to provide support for the U.S. dollar and limit demand for risk-sensitive assets.

These expectations were reaffirmed by comments from Chicago Federal Reserve President Austan Goolsbee, who stated that underlying inflationary pressures remain very high and are moving in the wrong direction. Furthermore, New York Federal Reserve President John Williams stepped back from his expectations of inflation returning to the 2% target, saying inflation remains very high, though it is likely to decline this year.

Additionally, a broad sell-off in global technology stocks earlier this week further dampened investor sentiment, negatively impacting Bitcoin's price.

- Selling intensifies:
Institutional demand continued to decline this week. Data from SoSoValue shows that Bitcoin ETFs recorded outflows of $1.35 billion through Thursday. Unless Friday's inflows are very significant, Bitcoin is set to record its seventh week of steady withdrawals. This indicates that institutional demand continues to wane and is unable to provide a buffer against falling Bitcoin prices.

Weekly net flow chart for spot Bitcoin ETFs. Source: SoSoValue
As reported last week, Bitcoin saw a slight recovery in the second week of June after being in oversold territory. This recovery appeared to be primarily driven by seller exhaustion rather than a genuine resurgence in investor demand, suggesting the rally may lack a solid foundation. The sharp sell-off this week has confirmed this hypothesis, as sellers have regained full control and reinforced the prevailing downtrend.

Unless new buying interest emerges, the current Bitcoin correction could extend toward $53,400, a level that has historically represented bear market bottoms in previous cycles.
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Weekly Bitcoin Forecast: Will Bitcoin price hit a 20-month low, and will this decline continue?
Bitcoin price has fallen 5% so far this week, reaching a new yearly low of 58115 dollars and a low since October 2024.
Spot ETFs listed in the US recorded $1.35 billion in outflows through Thursday, marking the seventh consecutive week of withdrawals.
Geopolitical uncertainty and the Federal Reserve's hawkish policy continue to dampen risk sentiment, negatively affecting Bitcoin price.

Bitcoin (BTC) price edged up to $66,000 on Friday, after hitting a yearly low of $58,115 earlier this week, the lowest since October 2024. Institutional selling intensified as ETFs recorded net outflows of $1.35 billion through Thursday. Additionally, geopolitical uncertainty and the Federal Reserve's hawkish stance continue to weigh on risk appetite, keeping Bitcoin under pressure.

Middle East tensions pressure Bitcoin
Bitcoin price remained under pressure this week, losing over 5% as traders assessed conflicting signals from various parties involved in the Middle East conflict.

The week started with slight progress in US-Iran peace negotiations, initially improving market sentiment. However, in the second half of the week, news emerged of an attack by Iran's Revolutionary Guard on a Singapore-flagged cargo ship in the Strait of Hormuz, renewing concerns about the sustainability of the preliminary US-Iran peace agreement.

Meanwhile, ongoing tensions between Israel and Lebanon kept geopolitical uncertainty high. Israel continues its attacks on southern Lebanon, while Prime Minister Benjamin Netanyahu states that the Israeli army 'will not withdraw' from occupied areas.

These developments have kept uncertainty at a high level, negatively affecting risk-sensitive assets like Bitcoin, which remained under pressure and hit a new yearly low of 58115 dollars this week.
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