BTC Breaks Support

Bitcoin futures remain in the red through the European morning session on Monday. BTC broke down last week as a stronger US Dollar diluted bullish sentiment in the leading crypto asset. A hawkish message from the Fed at the June FOMC last week proved too much for BTC bulls to handle with the futures market slipping below the 66,625 level support. Near-term, the focus is likely to remain on USD and Fed expectations. Given the shift in outlook from the Fed (1 rate cut now seen this year, down from 3 prior), USD looks likely to remain supported which should cap upside in BTC leading to a further range rotation lower.

Bullish Drivers Still Seen

Despite the near-term bearish risks for BTC, the picture remains favourable across the medium term. If US CPI continues to fall, particularly if we see a sharper drop), this should see near-term Fed easing expectations start to grow, pulling USD lower. Powell cautioned that the Fed’s new outlook on rates was a conservative forecast, meaning there could still be more than one cut this year depending on how inflation develops. As such, incoming US inflation data will be highly important for BTC. Consequently, the major downside risk for BTC is if inflation stalls or starts to move higher and easing projections get pushed out, leading USD higher near-term.

Technical Views

BTC

The sell off in BTC has seen the market breaking down below the 69,355 level and back inside the bear channel which has framed price action over the last few months. Price is now trading below the 66,625 level and is close to testing the 64,540 level support. If we break below there, focus will turn to deeper support at 60,695 in line with bearish momentum studies readings.