Bitcoin (BTC) has been trading in a narrow 3.4% range for the past three days after successfully defending the $25,500 support on June 10. In this time, investors’ attention has shifted to the macroeconomic area as the U.S. Federal Reserve will announce its interest rate decision on June 14.
Cryptocurrencies might work independently from the traditional finance markets, but the cost of capital impacts almost every investor. Back in May, the Fed raised its benchmark interest rate to 5%–5.25%, the highest since 2007.
All eyes will be on Fed’s Chair Jerome Powell media speech 30 minutes after the rate announcement as markets are pricing in 94% odds of a pause at the June meeting, based on the CME FedWatch tool.
Crypto fears more than just a FOMC meeting
The upcoming FOMC meeting isn’t the only concern for the economy, as the U.S. Treasury is set to issue more than $850 billion in new bills between now and September.
Additional government debt issuance tends to cause higher yields and, thus, higher borrowing costs for companies and families. Considering the already restrained credit market due to the recent banking crisis, odds are that gross domestic product growth will be severely compromised in the coming months.
According to on-chain analytics firm Glassnode, miners have been selling Bitcoin since the start of June, potentially adding further pressure to the price. Among the potential triggers are reduced earnings from a cooldown in Ordinals activity and the mining hash rate reaching an all-time high.
Investors now question whether Bitcoin will test the $25,000 resistance, a level unseen since mid-March and for this reason,they are closely monitoring Bitcoin futures contract premiums and the costs of hedging using BTC options.
Bitcoin derivatives show modest improvement
Bitcoin quarterly futures are popular among whales and arbitrage desks. However, these fixed-month contracts typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement.
As a result, BTC futures contracts in healthy markets should trade at a 5% to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.
The demand for leveraged BTC longs has slightly increased as the futures contract premium increased to 3% from 1.7% on June 10, although it is still far from the neutral 5% threshold.
Traders should also analyze options markets to…
Click Here to Read the Full Original Article at Cointelegraph.com News…
