Bitcoin and Ether start the week on a downward trend as Asia initiates its business activities, reflecting a mix of bullish and bearish signals permeating the market.
Crypto markets are in decline amidst resurfacing concerns about U.S. stagflation, a dire scenario for risk assets. Bitcoin (BTC), the primary cryptocurrency by market capitalization, is trading near $62,400 at present, marking a 2.5% dip. Similarly, Ether (ETH) is down 3% and trading at $3,200.
The current market sentiment appears undecided, as it navigates through competing bullish and bearish narratives. Last week's U.S. GDP report indicated a growth rate of 1.6% in the first quarter of the year, a deceleration from the previous quarter's 3.4% expansion. Additionally, the Personal Consumption Expenditures Price (PCE) index, the Federal Reserve's preferred gauge of inflation, exhibited a rise to a 3.4% annualized rate in the initial three months of the year, up from 1.8% in the final quarter of 2023.
The stagflationary combination of sluggish growth and persistent inflation dampens the likelihood of Federal Reserve rate cuts. While most traders on prediction market platform Polymarket foresee no rate cuts as the most probable outcome, with a 35% likelihood, the prospect of a single rate cut is gaining traction, now standing at 29%, compared to 26% a week ago and 14% at the start of the month.
The upcoming launch of bitcoin exchange-traded funds (ETFs) in Hong Kong on April 30 garners attention from traders. However, news of mainland Chinese investors being unable to trade these ETFs has tempered the initial bullish sentiment surrounding the launch.