Bitcoin (BTC) News Today: US Political Shifts and ETF Dynamics Stir BTC Market

Economic

Cryptocurrency

Summary:

Bitcoin (BTC) declined by 1.50% on Tuesday, ending the session at $68,327.Market sentiment toward the Fed interest rate trajectory and a shifting US crypto political landscape delivered a choppy sessionl...

US Economic Indicators and US Politics Take Center Stage

On Tuesday (May 28), bitcoin (BTC) declined by 1.50%. Reversing a 1.35% gain from Monday (May 27), BTC ended the session at $68,327.

An unexpected rise in US consumer confidence and hawkish Fed chatter impacted buyer demand for BTC. The CB Consumer Confidence Index increased from 97.0 to 102.0 in May. An improving consumer confidence environment could fuel consumer spending and demand-driven inflation. The Fed could delay the timing of rate cuts to impact disposable income and consumer spending.

Furthermore, FOMC member Neel Kashkari spoke on Tuesday, wanting to see more progress on taming inflation before supporting rate cuts. A more hawkish Fed rate path could affect buyer appetite for riskier assets.

However, hopes of a shift in sentiment toward crypto on Capitol Hill could counter the effects of a hawkish Fed interest rate trajectory.

On Tuesday, Ripple CEO Brad Garlinghouse reflected on the possible shift in US political sentiment toward cryptos, saying,

“For the first time in US history, crypto voters will be a significant force in this year's election.”

In 2023, Coinbase (COIN) CEO Brian Armstrong and 40 crypto founders were on Capitol Hill raising crypto awareness. Kickstarting the #StandWithCrypto campaign, crypto leaders highlighted that 52 million Americans owned digital assets.

The numbers may have increased significantly since the launch of the US BTC-spot ETFs. Since launching on January 11, the US BTC-spot ETF market saw total net inflows of $13,628.5 million.

Republican Party front-runner Donald Trump recognized the significance of the crypto vote. In May, Trump targeted crypto voters, saying,

“If you like crypto in any form…and it comes in many forms…if you're in favor of crypto, you better vote Trump.”

Nevertheless, uncertainty about the Fed interest rate trajectory influenced buyer demand for US BTC-spot ETFs.

US BTC-Spot ETF Inflow Streak Hinged on iShares Bitcoin Trust

Going into the Tuesday session, the US BTC-spot ETF market had enjoyed a 10-day inflow streak. However, flow data for the Tuesday session showed a marked pullback in demand.

According to Farside Investors,

Grayscale Bitcoin Trust (GBTC) saw net outflows of $105.2 million after zero net flows on Friday (May 24).Fidelity Wise Origin Bitcoin Fund (FBTC) reported net inflows of $34.3 million, down from $43.7 million on Friday.Five issuers reported net inflows excluding numbers from BlackRock (BLK) and Valkyrie.Excluding flow data for iShares Bitcoin Trust (IBIT) and Valkyrie Bitcoin Fund (BRRR), the US BTC-Spot ETF market saw total net outflows of $58.7 million. On Friday, the spot market saw total net inflows of $251.9 million.

Technical Analysis

Bitcoin Analysis

Bitcoin (BTC) News Today: US Political Shifts and ETF Dynamics Stir BTC Market_1

BTC sat above the 50-day and 200-day EMAs, sending bullish price signals.

A BTC break above the $69,000 resistance level would support a move toward the $73,808 all-time high.

FOMC member chatter, US BTC-spot ETF market flow data, and US lawmakers need consideration.

Conversely, a BTC drop below the $67,500 handle could give the bears a run at the 50-day EMA.

With a 56.21 14-Daily RSI reading, BTC could return to the all-time high of $73,808 before entering overbought territory.

Ethereum Analysis

Bitcoin (BTC) News Today: US Political Shifts and ETF Dynamics Stir BTC Market_2

ETH hovered well above the 50-day and 200-day EMAs, confirming the bullish price trends.

An ETH breakout from the $3,835 resistance level would support a move to the $4,000 handle. A break above the $4,000 handle could signal a return to the March high of $4,091.

US ETH-spot ETF market-related updates need consideration.

Conversely, an ETH fall below the $3,750 handle could give the bears a run at the $3,480 support level.

The 14-period Daily RSI reading, 68.50, suggests an ETH return to $4,000 before entering overbought territory.

Source: FX Empire

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Alex

Economic

Stocks

Most Asian stocks fell on Wednesday, weighed by persistent concerns that sticky inflation will push major central banks into keeping interest rates high for longer.

Chinese markets were somewhat of an exception, advancing slightly after the government announced more measures to support the beleaguered property sector.

Regional stocks took middling overnight cues from Wall Street, which was boosted chiefly by a rally in NVIDIA Corporation (NASDAQ:NVDA), which in turn pushed the NASDAQ Composite to record highs.

But beyond tech, broader U.S. stocks were muted in anticipation of key inflation data due later this week. Federal Reserve officials also kept up their hawkish commentary on interest rates.

U.S. stock index futures were flat in Asian trade.

Australia sinks on inflation shock, RBA jitters

Australia's ASX 200 index was among the worst performers in Asia, sinking 1% after consumer price index inflation data read stronger than expected for April.

The reading marked a second straight month of increased inflation, and drummed up concerns over a more hawkish Reserve Bank of Australia.

Sticky inflation could push the RBA into keep rates high for longer, or even potentially raising rates further this year, as it moves to bring down inflation.

The central bank had considered a rate hike in its May meeting, and had signaled that it would not rule out any measures to bring down sticky inflation.

Japanese stocks hit by mixed BOJ signals

Japan's Nikkei 225 index fell 0.3%, while the broader TOPIX index lost 0.5% on Wednesday.

Bank of Japan member Adachi Seiji warned that excessive declines in the yen could attract policy tightening by the central bank, especially if it impacted inflation.

Adachi also forecast that inflation would pick up in the summer-autumn period, and that the BOJ will gradually phase out its stimulative asset purchase programs.

But he warned against any quick increases in interest rates, due to risks to Japan's economy, and stressed on the need to keep policy accommodative in the near-term.

Broader Asian stocks also retreated, as anticipation of more cues on U.S. inflation and interest rates battered sentiment.

South Korea's KOSPI fell 0.9%, while futures for India's Nifty 50 index pointed to a negative open, with the index set for more profit-taking after hitting record highs this week.

Hong Kong's Hang Seng index slid nearly 1% on profit-taking in technology stocks, which offset gains in the property sector.

Chinese stocks rise on more property support

China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were the sole gainers in Asia on Wednesday, rising 0.5% and 0.4%, respectively.

A slew of major Chinese cities, including Shanghai and Shenzhen, were seen further loosening restrictions on home buying and lending requirements for property investment.

The measures come just weeks after Beijing announced a swathe of supportive measures for the property market, a slowdown in which has been a major point of contention for the Chinese economy.

Source: Investing.com

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Samantha Luan

Economic

Commodity

Soybean futures also slipped amid ample supply from South America, while corn dipped as U.S. planting weather improved.

The most-active wheat contract on the Chicago Board of Trade (CBOT) Wv1 was down 1% at $6.93-1/2 a bushel by 0220 GMT, after rising to $7.20 on Tuesday, its highest since July 2023.

Wheat prices have surged from a 3-1/2-year low in March, with analysts cutting Russian wheat harvest estimates by around 10 million metric tons due to dry conditions and frosts.

Russia is the world's biggest and lowest-cost wheat exporter, and crop losses there are driving up prices despite improving growing conditions in other exporters including U.S. and Canada, said Commonwealth Bank analyst Dennis Voznesenski.

"Also, on the demand side, you have China importing significantly more than many people expected at the start of the year," he said, adding that prices should be well supported for the time being.

Weather charts suggest that rain this week could reach more of southern Russia than previously expected, pausing wheat's rally.

In neighbouring Ukraine, the grain union also this week slightly reduced its harvest estimates due to dry weather and a smaller planted area.

CombinedRussian and Ukrainian wheat production of less than the current forecast of around 100 million tons would significantly impact global trading patterns, said StoneX analyst Arlan Suderman.

However, he said the region could still produce a solid crop.

"Ukraine's potential is still relatively good, due to good soil moisture reserves, whereas Russia's crop could also benefit from improved moisture in June, if that were to occur," hesaid.

Meanwhile, the U.S. Department of Agriculture (USDA)rated 48% of the domestic winter wheat cropin good-to-excellent condition, below trade expectations but still the highest for this time of year since 2021.

In other crops, CBOT soybeans Sv1 slipped 0.5% to $12.23-3/4 a bushel and corn Cv1 was 0.4% lower at $4.60-3/4 a bushel.

Both have risen slightly in recent months as the supply outlook tightened but remain near their lowest levels since 2020.

Source:Reuters

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Cohen

Economic

Three of China’s biggest cities have rolled out major easing for homebuyers, as local authorities follow through on the central government’s aid for the embattled property sector.

Shanghai, Shenzhen and Guangzhou slashed downpayment requirements and allowed room for cheaper home loans in a bid to revive demand for residential properties. Analysts expect Beijing, the other tier-1 city, to do the same.

A Bloomberg gauge of Chinese developer shares rose as much as 2.4% on Wednesday morning before paring gains. It has climbed about 50% from an April low on optimism that authorities would take further steps to support the market.

Officials are trying to revive homebuyer confidence that has been crushed by falling prices, unfinished apartments and job insecurity. The latest easing comes after the government unveiled a package earlier this month to unleash 300 billion yuan ($41 billion) of funding to help local authorities buy unsold homes.

“We expect Beijing city to follow suit later,” said Jeff Zhang, a property analyst at Morningstar Inc. “We expect these combined policies will help boost property sales and the stabilization of housing prices.”

The central government recently allowed cities to reduce minimum downpayments and make their own decisions for interest rates on mortgages.

Shanghai and Shenzhen reduced downpayment requirements by 10 percentage points to a minimum of 20% for first-time buyers and 30% for second-home purchasers. Guangzhou cut the threshold by 15 percentage points to as little as 15% of the price for first-time homebuyers. Shanghai and Shenzhen lowered floors for mortgage rates, while Guangzhou removed them entirely.

Tianjin, a city neighboring Beijing with a population of 14 million, on Wednesday also lowered the downpayment ratio to a minimum of 15% and scrapped the mortgage-rate floor. The northern city of Shenyang did similar.

The measures will likely lead to a sales recovery in the next month or two, according to Zhang Hongwei, founder of Jingjian Consulting, which advises real estate companies. Still, whether the recovery will extend to the second half of the year remains unknown, he cautioned.

Reviving sentiment is a daunting challenge. There was a flurry of activity among homebuyers after the central government announced its rescue package earlier this month, but it has already begun losing steam.

In Shenzhen, which has more property investors than other cities and tends to react the most to loosening, home sales tapered off in the week ended May 26 from a week earlier, which immediately followed the rescue, according to data compiled by Midland Holdings’ realty unit. Homebuyer visits for existing properties shrank 6.9% last weekend, following an initial 127% surge the previous weekend, according to local agency Leyoujia.

New-home sales by area in tier-1 cities declined 7% in the week ended May 26 from the previous week, according to data agency Wind. Sales gained 9% and 13% in tier-2 and tier-3 cities respectively, both close to levels seen in the March busy season. Still, sales remained more than 25% below last year’s weekly average across all three city tiers.

To be sure, green shoots are emerging in the second-hand market. In Shanghai, sales of existing homes reached an average 779 units over the two weekends following the central government’s announcement, better than the weekends following two rounds of major loosening last year, according to calculations based on the official housing transaction website.

“Policymakers’ determined stance to rescue the property sector is quite obvious and local governments also turn to be more cooperative this time around,” Raymond Cheng, head of China property research at CGS International Securities HK, wrote in a note. “They may take accountability for further deterioration of their property markets.”

Source:Bloomberg

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Kevin Du

Economic

U.S. consumer confidence unexpectedly improved in May after deteriorating for three straight months amid optimism about the labor market, but worries about inflation persisted and many households expected higher interest rates over the next year.

The mixed survey from the Conference Board on Tuesday also showed more consumers believed that the economy could slip into recession in the next 12 months. Nonetheless, consumers were very upbeat about the stock market and more planned to buy major household appliances over the next six months.

While the economy is expected to slow this year as a result of the cumulative impact of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to tame inflation, economists and most business executives are not forecasting a downturn.

"Continued positive job growth, rising wages, an ebullient stock market and healthy household balance sheets will keep consumers spending despite elevated prices and borrowing costs," said Oren Klachkin, financial market economist at Nationwide.

The Conference Board said that its consumer confidence index increased to 102.0 this month from an upwardly revised 97.5 in April. Economists polled by Reuters had forecast the index slipping to 95.9 from the previously reported 97.0. It outperformed the University of Michigan's sentiment index.

Confidence remains within the relatively narrow range it has been hovering in for more than two years.

The improvement was across all age groups, with consumers making annual incomes over $100,000 posting the largest increase in confidence. On a six-month moving average basis, confidence remained highest among the under-35 age cohort and those with annual incomes of more than $100,000.

Consumers' perceptions of the labor market also improved, with the survey's so-called labor market differential, derived from data on respondents' views on whether jobs are plentiful or hard to get, widening to 24 from 22.9 in April, though opportunities are probably not as abundant as in the past year.

"The level of this measure remains elevated by historical standards and points to a still strong labor market," said Michael Hanson, an economist at JPMorgan.

The measure closely correlates to the unemployment rate in the Labor Department's employment report. Labor market resilience, mostly characterized by historically low layoffs, is underpinning the economic expansion. Consumers' 12-month inflation expectations rose to 5.4% from 5.3% in April.

"Consumers cited prices, especially for food and groceries, as having the greatest impact on their view of the U.S. economy," said Dana Peterson, chief economist at the Conference Board. "Perhaps as a consequence, the share of consumers expecting higher interest rates over the year ahead also rose, from 55.2% to 56.2%."

About 48.2% of consumers in the survey expect stock prices to increase over the coming year, compared to 25.4% anticipating a decrease.

Stocks on Wall Street were trading higher, with the technology-heavy Nasdaq index breaching the 17,000 level for the first time. The dollar fell against a basket of currencies. U.S. Treasury prices were lower.

HOUSE PRICE GAINS SLOW

Consumers' inflation and interest rate views were likely colored by a surge in price pressures in the first quarter. That, together with still-solid economic growth, has prompted financial markets to push back expectations for the first rate cut from the U.S. central bank to September from June. The Fed has kept its policy rate in the 5.25%-5.50% range since July.

Consumers' perceived likelihood of a recession over the next year rose for the second consecutive month. Despite concerns about higher prices and an economic downturn, consumers are not planning to cut back on spending in a significant way.

The survey's measure of buying plans for major appliances over the next six months rose to 49.4 from 43.0 in April, driven by television sets, refrigerators, vacuum cleaners and clothes dryers.

Buying plans for motor vehicles were unchanged while those for houses dropped amid higher mortgage rates and elevated home prices. On a six-month moving average basis, purchasing plans for homes were unchanged in May at their lowest level since August 2012.

A separate report from the Federal Housing Finance Agency on Tuesday showed house prices increased 6.7% in March on a year-on-year basis after advancing 7.1% in February.

Prices are being driven by a shortage of homes available for sale, and housing costs have been the major driver of inflation.

Though supply is gradually improving, it remains well below pre-pandemic levels.

"We expect home price growth to remain positive in the quarters ahead, with risks skewed to the upside," said Bernard Yaros, lead U.S. economist at Oxford Economics.

"Scarce supply in the resale market, a sturdy labor market, and pent-up demand from Millennials aging into their prime household-formation years argue for potentially firmer house price gains than in our baseline forecast."

Source: Reuters

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FastBull Featured

Remarks of Officials

On May 27, local time, the Bank of Portugal Governor Mario Centeno said in an interview as follows.

The early-year acceleration in workers' pay in the euro zone is no cause for concern about inflation. I don't read too much into 0.2 points above what we were expecting. The drop in real wages due to soaring consumer prices is expected to be reversed in the coming years, but the pace at which this happens is an open question. This real-wage recovery is compatible with inflation converging to 2%.

The path for monetary policy is unclear following a first reduction in June. Investors pared bets on interest-rate cuts in the wake of the pay data and a separate release suggesting a recovery in the euro-area economy. I think that market repricing is an overreaction as the downward trajectory for prices is still intact.

I am optimistic about the economic recovery in the euro area and my colleagues and I expect euro area inflation to continue to fall.

The European Central Bank needs to see the economic data continue to grow. Some recovery of the economy in the euro zone will not jeopardize the disinflation process. In addition, the recovery of productivity figures, which were not positive in the last couple of years, will help to secure the disinflation process.

Centeno's Speech

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FastBull Featured

Data Interpretation

On May 29, local time, the Australian Bureau of Statistics released the April Consumer Price Index (CPI):

CPI rose by 3.6% from a year earlier, higher than the expectations of 3.4% and the previous reading of 3.5%.

New dwelling prices rose 4.9% in the 12 months to April, maintaining a consistent annual price growth of around 5% for the past nine months. Rental prices increased 7.5% in the 12 months to April, down from 7.7% in March, which continues to reflect strong demand for rental properties. In monthly terms, rental prices rose 0.5% in April, down from a 0.6% rise in March. The decline in growth rate was because Commonwealth Rent Assistance (CRA) increased. Excluding the CRA increases in March and April, rents would have risen by 0.7% in both months.

Food and non-alcoholic beverage prices rose 3.8% in the 12 months to April, up from a rise of 3.5% to March, mainly due to a rise in fruit and vegetable prices.

Automotive fuel prices rose 7.4% in the 12 months to April, down from a rise of 8.1% to March. In monthly terms, Automotive fuel prices rose 2.2% in April, the third consecutive monthly rise. The rise was driven by higher wholesale fuel prices. Electricity prices rose 4.2% in the 12 months to April, down from a rise of 5.2% to March.

Holiday travel and accommodation prices fell 6.2% in the 12 months to April but rose 4.6% from a month earlier, the first monthly rise since December 2023. The main reason for the monthly rise was higher demand for international travel over the Easter and school holiday periods.

Australian inflation rose more than expected in April, marking the second consecutive month of rise. The largest contributors to the rise were housing, food and non-alcoholic beverages, tobacco and alcohol, and transport. This suggests that the disinflationary process is not smooth and the economic outlook remains highly uncertain.

Automotive fuel, fruit and vegetables, as well as holiday travel and accommodation in the CPI report are volatile items. CPI excluding these volatile items came in at 4.1%, unchanged from the previous month. In other words, Australia's inflation is not "reversed" but only "stagnant".