Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Bitcoin prices edged higher on Thursday, benefiting from a broader rally in risk-driven markets as traders increasingly bet on a September interest rate cut by the Federal Reserve. However, gains were limited by concerns over potential new token distributions from the defunct crypto exchange Mt Gox, which kept the cryptocurrency in a tight trading range.
Bitcoin Struggles to Maintain Momentum
By 00:50 ET (04:50 GMT), Bitcoin had risen 2.4% to $60,751.8. Despite the uptick, the token has struggled to stay above the $60,000 mark and has traded within a narrow range for most of the week. The market’s appetite for risk was also dampened by data showing a significant downward revision in U.S. labor statistics, fueling fears of an impending recession.
Mt Gox Token Distributions Raise Concerns
A major factor weighing on Bitcoin’s price is the ongoing token distributions from Mt Gox, a defunct cryptocurrency exchange that was hacked in 2014. On Wednesday, wallets associated with Mt Gox were observed moving approximately $700 million worth of tokens, following the transfer of about $2 billion earlier in the week.
The exchange began returning tokens to its clients in early July, raising concerns that these distributions could lead to an increase in Bitcoin supply and consequently heighten selling pressure. The exact amount of Bitcoin held by Mt Gox remains unclear, but estimates from Coindesk suggest the figure could be around 46,000 tokens, valued at $28 billion based on current spot prices.
Rate Cut Speculation and Recession Fears
The prospect of a September rate cut grew stronger after the release of the Federal Reserve’s late-July meeting minutes, which revealed that policymakers were leaning towards lowering interest rates. According to CME FedWatch, traders are split on whether the Fed will opt for a 25 or 50 basis point cut.
However, this optimism was tempered by a sharp downward revision in U.S. payrolls data for the year leading up to March 2024. The revised figures indicated that the labor market is weaker than previously thought, reigniting concerns that a cooling job market could increase the risk of a U.S. recession later this year. Such a scenario would negatively impact risk sentiment, even in the face of potential rate cuts.
As Bitcoin navigates these mixed signals, its near-term trajectory will likely depend on further developments in both the Mt Gox situation and the broader economic outlook. Traders and investors will be closely watching for any additional information that could impact the cryptocurrency’s supply and demand dynamics, as well as any new data that could alter expectations for U.S. monetary policy.
