Bitcoin falls below $64,000 - professional traders remain cautious
Bitcoin fails to sustain weekend rally, trading below $64,000 — Professional traders take neutral position
Despite Bitcoin (BTC) rallying to a 3-week high this weekend, it has failed to elicit a positive reaction from professional traders, indicating that they are cautious about the sustainability of the trend.
Macroeconomic factors are still considered the main driver of cryptocurrency market behavior, with investors awaiting the Federal Reserve's September interest rate decision.
Given that the Russell 2000 index is currently trading 2% below its highest closing price in July 2024, it is hard to argue that traders have become more risk-averse. Meanwhile, gold, which is considered a safe haven asset, is currently just 0.6% below its all-time high. In addition, the US 2-year Treasury yield is approaching its lowest level since May 2023, which generally means that buyers are becoming more aggressive and willing to accept lower returns.
In general, the market is simultaneously seeking protection in assets that are considered safe and maintaining expectations of a positive impact on corporate earnings in the second quarter. This situation tends to be unfavorable for Bitcoin, mainly because most investors still view it as a risky asset. However, it is inappropriate to simplify the correlation between Bitcoin and stocks as highly correlated, as this relationship varies over time and rarely lasts for more than 5 months.
In addition, the escalation of geopolitical situation in the Middle East has also reduced investors' risk appetite. The missile exchange between Israel and Hezbollah in Lebanon, as well as major sociopolitical disputes in Libya, have affected market sentiment to some extent.
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