NAIROBI (CoinChapter.com) — The crypto market began the week with a sharp downturn, with major coins like Bitcoin and Ethereum seeing significant price drops. Investors eagerly await the Federal Open Market Committee (FOMC) meeting and the release of crucial economic data, both set for June 12. The global cryptocurrency market cap is $2.54 trillion, reflecting a 5.6% decline in the last 24 hours.
As of June 12, Bitcoin and Ethereum are trading below $68,000 and $3,500, respectively. The anticipation surrounding the FOMC meeting and upcoming economic reports has intensified market anxiety, contributing to the recent bearish trend.
Significant ETF Outflows Impact Crypto Market Sentiment
On June 10, Bitcoin exchange-traded funds (ETFs) experienced a $64.9 million outflow, the first since May 10, ending a 19-day streak of consecutive inflows.
Grayscale’s GBTC led the outflows with $39.5 million, bringing their total outflows to $18 billion. The BTCO Invesco Galaxy ETF saw a $20.5 million outflow, yet it maintains a positive net inflow of $300 million.
Valkyrie’s BRRR ETF experienced a $15.8 million outflow, but its total net inflow remains at $497 million. Fidelity’s FBTC had a smaller outflow of $3 million but holds a robust total inflow of $9.6 billion.
In contrast, BlackRock’s IBIT recorded a $6.3 million inflow, while Bitwise’s BITB ETF saw a $7.6 million inflow. Despite recent outflows, institutional interest in cryptocurrencies remains strong, with total inflows into Bitcoin ETFs standing at $15.6 billion.
Rate Uncertainty Increases Crypto Market Volatility
Uncertainty surrounding the upcoming FOMC meeting and the release of the Consumer Price Index (CPI) report drives bearish sentiment in the market.
Estimates place CPI inflation at 3.4%, while core CPI should hit 3.5%. Investors closely monitor the Fed’s interest rate decision, with the CME FedWatch Tool indicating a high market expectation for the Fed to maintain rates between 525 and 550 basis points.
Markus Thielen from 10x Research offers insights into potential market reactions based on the CPI data. If the CPI prints at 3.3% or lower, Thielen suggests Bitcoin could attempt to break out. However, if the CPI prints at 3.5% or higher, he believes Bitcoin will likely correct over the next few weeks.
Despite the potential correction, Thielen maintains an optimistic outlook for higher Bitcoin prices.
Recent U.S. jobs data, showing the addition of 272,000 jobs in May and an unemployment rate rise to 4%, has dampened hopes for a Federal Reserve rate cut in September. This robust payroll report has raised concerns in the broader financial sector, including the cryptocurrency market.
Singapore-based trading firm QCP Capital views the price drop following the U.S. employment report as a buying opportunity. They argue that the Fed may struggle to keep rates high as other central banks, like the European Central Bank and Bank of Canada, have already begun cutting rates. Increased market liquidity from central bank rate cuts could boost demand for cryptocurrencies.
