Bitcoin Remains Stuck in a One-Month Range

On Wednesday, as anticipated, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve decided to maintain its target federal funds rate range at 5.25%-5.50%. The committee updated its economic forecast, and now predicts only one 25 basis point reduction in rate this year. “In recent months, there has been modest further progress toward the Committee’s 2 percent inflation target,” the FOMC stated in its policy release. The use of the word “modest” marks a shift from the previous statement, which noted a “lack of progress” in achieving lower inflation levels.

Fed Chairman Jerome Powell, in his post-meeting press conference, emphasized that inflation remains excessively high and that the central bank’s priority continues to be steering it back to the 2% target. Earlier in the day, the U.S. Consumer Price Index for May indicated a surprising deceleration in inflation, which initially led to a surge across crypto, stock, and bond markets as traders heightened their expectations for the start of Fed rate reductions. However, the more cautious tone in the Fed’s economic outlook later confirmed by Powell, tempered these market rallies. By late in the day Bitcoin had dropped to $67,300, before recovering to $68,000, still stuck in a range.

U.S. Spot Bitcoin exchange-traded funds (ETFs) experienced two consecutive days of outflows early in the week as traders reduced risk before Wednesday’s FOMC meeting. The eleven ETFs registered net outflows of $200 million on Tuesday, marking the largest daily withdrawal since the $580 million recorded on May 1. The outflows occurred during a downturn in BTC prices, which briefly dipped to $66,200 before rebounding.

Source: X

Grayscale’s GBTC led the outflows, accounting for $120 million of the total, continuing its trend as the ETF with the highest cumulative outflows ($18 billion) since its inception in January. Other funds, including Ark Invest’s ARKB, Bitwise’s BITB, Fidelity’s FBTC, and VanEck’s HODL, also saw significant outflows, ranging from $56 million to $7 million, with none reporting inflows.

Additional challenges are expected from Treasury Secretary Janet Yellen’s speech on Friday, which could impact risk assets like cryptocurrencies, depending on her remarks.

Trump Wants American Bitcoin

On Tuesday, Republican presidential hopeful Donald Trump expressed his desire for the U.S. to dominate the remaining Bitcoin production, emphasizing the strategic importance of this in achieving energy supremacy. “Bitcoin mining could be our last barrier against a CBDC. Biden’s dislike for Bitcoin favors nations like China, Russia, and the radical communist left. We need all remaining Bitcoin to be MADE IN THE USA!!! This will position us as leaders in energy,” Trump posted on Truth Social.

Source: Truth Social

Earlier that day, Trump, the first U.S. presidential candidate to accept crypto donations, held discussions with executives from Nasdaq-listed bitcoin mining companies CleanSpark Inc. and Riot Platforms at an event in Mar-a-Lago. He reportedly emphasized to those present that mining operations could help stabilize the energy supply of the grid.

Source: Trump meets with Mining CEO, X

Whales Accumulate, Brazil Adopts

Despite price uncertainty, Bitcoin has seen a significant increase in accumulation by large holders, reaching levels not observed since before the 2020 bull market. This surge in activity gives hope to bulls waiting to see if Bitcoin can break above the $70,000 threshold.

According to a Bitfinex research report, Bitcoin whales, entities holding at least 1,000 BTC, have amassed their holdings to a nearly four-year peak. Bitfinex analysts wrote, “Adding another layer to this bullish sentiment, Bitcoin ‘whales’ are also accumulating Bitcoin at a pace reminiscent of the pre-2020 bull run. This accumulation, now at its highest in the last two months, has led to a new historical high in their Bitcoin balance.” This pattern suggests a growing confidence among major investors, which could potentially catalyze a significant price movement in Bitcoin.

Itaú Unibanco, the largest bank in Brazil and Latin America, has expanded Bitcoin and cryptocurrency trading to over 60 million customers. Initially limited to a select group of clients in December 2023, the bank’s investment app, Ion, now enables all users to trade Bitcoin and Ethereum. Guto Antunes, head of digital assets at Itaú, noted in an interview that this expansion was prompted by strong demand for Bitcoin and cryptocurrency services, as evidenced by weekly surveys among initial users. Although specific user metrics were not disclosed, Antunes highlighted that the Ion app has achieved over 3.5 million downloads, indicating robust interest in cryptocurrency within Brazil. To provide enhanced security, Itaú has developed its own custody solution for clients’ wallets, ensuring each user has a separate wallet for asset segregation. As the preeminent bank in Brazil with a vast customer base, Itaú’s decision to facilitate Bitcoin trading is a boon to mainstream adoption. The bank seeks to become the preferred portal for Brazilians venturing into this novel asset class, recognizing Bitcoin’s growing popularity in the region.

Finally, it has now been three years since Elon Musk said that Tesla would accept Bitcoin payments for its cars when Bitcoin mining was 50% sustainable.   Today, 54% of miners use clean energy, however, Tesla does not accept bitcoin. The car company does accept Dogecoin for merch payments.