Bitcoin Dips as DXY, US Yields Rise on Strong US Economic Data – Here’s Where BTC is Headed Next
Bitcoin (BTC) has come under modest sell pressure on Thursday amid a rise in US bond yields and the US Dollar Index (DXY) as a result of stronger-than-expected US economic data.
The BTC price was last around $29,100, down nearly 1% on the day, with the bears eyeing a retest of this week’s sub-$29,000 lows.
Data on Thursday showed that the annualized quarterly pace of US economic growth unexpectedly rose to 2.4% in the second quarter, well above expectations for a slight slowdown to 1.8% from 2.0% in the first quarter.
Q2 Price Index data released alongside the economic growth figures showed inflation fell to an annualized pace of 2.2%, well below the expected drop to 3.0% from 4.1% in Q1.
Meanwhile, weekly US jobs data showed initial jobless claims falling to 221,000, well below the expected 235,000 and at levels consistent with a still very healthy jobs market.
All said, the strong growth and jobs data coupled with the larger-than-expected strengthened the argument that the US economy will achieve a so-called “soft landing” – i.e. where the Fed is able to bring inflation back to its 2.0% target without triggering a recession with all of its monetary policy tightening.
That pushed US yields and the DXY higher, weighing on bitcoin, which tends to have a negative correlation to both similar to how gold does.
Bitcoin is a non-yielding asset, therefore higher bond yields raise the opportunity cost of holding it.
A stronger dollar, meanwhile, increases the cost for holders of international currency to purchase USD-denominated bitcoin, reducing its demand.
Macro headwinds from the strong US dollar and rising yields risk pushing bitcoin to the south of its 50-Day Moving Average (DMA), which over the past few days has been acting as
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