Original author: Mary Liu, BitpushNews

On Tuesday, the cryptocurrency market is in a narrow range of fluctuations. Bitcoin's early trading price approached $63,000, fell after Powell's comments, and touched a low of $61,730 in the afternoon. It rebounded to $61,901 at the time of writing, with a nearly 2% decline in 24 hours.

Most altcoins fell along with Bitcoin, with more falls than rises among the top 200 tokens by market capitalization.

BinaryX (BNX) performed well, pumping 21.4%, with a trading price of $0.9755, Arcblock (ABT) rose 9.8%, Helium (HNT) rose 6.5%. Pendle (PENDLE) suffered the largest decline, dropping 14.1%, followed by ether.fi (ETHFI) down 10.3%, Aave (AAVE) down 8.3%.

The current market capitalization of the cryptocurrency is $2.29 trillion, with Bitcoin's market share at 53.2%.

In the U.S. stock market, at the close, the S&P, Dow Jones, and Nasdaq indexes all pumped, with increases of 0.62%, 0.41%, and 0.84% respectively. The S&P and Nasdaq indexes both closed at record highs.

Fed and Employment Data Drive the Market

The latest data from the US Bureau of Labor Statistics shows that the number of job vacancies in the United States at the end of May was 8.14 million, an increase from 7.92 million in April. Market observers are currently looking forward to the release of the June employment report on Friday, hoping that the report will provide more evidence that the labor market is cooling, thereby providing support for rate cuts.

Earlier in the day, Powell said that the cooling of inflation was encouraging to him. The inflation data for April and May showed that the Fed is 'transitioning to a path of deflation,' but he refused to comment on the timing of the first rate cut, reiterating the need to see more evidence of progress before cutting rates.

Powell said, "We have made significant progress. We just want to understand if the levels we see are truly reflecting the actual state of underlying inflation."

ETC Group's research director, André Dragosch, commented, "Since US employment data usually includes lagging indicators, with only a few exceptions such as initial claims for unemployment benefits, we expect that US employment data may deteriorate in the coming months, as observed in the patterns of housing and other leading indicators. More importantly, there is increasing evidence that the latest employment data should be treated with caution."

He said, "Although the latest May non-farm employment figures exceeded general expectations, the 'details' of the employment report indicate that the US labor market conditions are clearly weakening."

Dragosch emphasized some recent 'unexpected negative growth' in the labor market and said that these 'lead to a further repricing of expectations for global benign growth, as market participants increasingly consider the possibility of a US economic recession.'

Meanwhile, major US stock indices reached historic highs in June. However, this occurred with a weakening market breadth, as the performance of the bottom 490 stocks typically lags behind the top 10 large-cap stocks in the S&P 500 index. Therefore, the polarization in the traditional stock market also indicates increased risks of recession and adjustment.

Dragosch said, "The risk of Bitcoin and other encrypted assets is that, first of all, major large stock indices such as the S&P 500 still show a relatively high correlation with major encrypted assets. Secondly, global growth expectations are still the main macro factors affecting the performance of Bitcoin."

He pointed out that both the S&P 500 index and Bitcoin are currently dominated by global growth expectations in terms of macro factors, which also explains the high correlation between the two markets. The liquidity of US government bonds is a 'potential systemic risk that could support Bitcoin and encrypted assets,' and it is noted that the available liquidity is 'currently worse than during the 2020 COVID-19 pandemic.' This may imply increased volatility in government bonds and the possibility of the Federal Reserve intervening in the bond market (i.e., quantitative easing), which may also require interest rate cuts similar to those in 2019.

If the Fed reopens the easing cycle and the dollar weakens, this will be favorable for Bitcoin and encrypted assets. Major central banks around the world have already lowered interest rates this year, such as the Bank of Canada, the European Central Bank, or the Swiss National Bank. Therefore, the liquidity situation seems to have begun to change.

Dragosch said, "We believe that the potential economic recession in the United States and the increasing risk of dysfunction in the U.S. Treasury market are the main catalysts for the Fed's final policy shift this year. Unless global risk appetite rises again, our basic forecast remains short-term consolidation until the positive impact of the halving becomes evident around August 2024. Nevertheless, due to the recent adjustments, valuations have become more attractive, and BTC is now approaching 'fair value.'"

$65,000 is a resistance level

Blockware Intelligence analysts said in the latest newsletter: 'In the short term, we should expect some resistance around the $65,000 level, as short-term market speculators may seek to exit positions at the 'break-even' level. Last summer, when BTC lost the support level of STH [short-term holder] RP, the price traded sideways for two months before finally breaking through again.'

Independent analyst Ali Martinez also mentioned this on the X platform, stating that based on the measurement standards of market value and actual value, BTC prices may encounter resistance above $65,000.

Martinez said that breaking this level could pave the way for Bitcoin to pump to $78,700.

Meanwhile, Thomas Fahrer, the founder of the cryptocurrency company Apollo, is more optimistic about Bitcoin's breakthrough of $65,000. He claimed in a post on July 2nd: '9.4 billion dollars' worth of Bitcoin shorts will be liquidated at $65,000. The first rule of Bitcoin is not to short, funds will flow in, and shorts will be punished.'