Bitcoin dips amid slide in tech stocks, U.S.-Iran tensions, and hawkish rate cues
Bitcoin slipped on Thursday, extending its retreat after hitting $65k earlier in the week, amid a broader hit to risk sentiment from sliding technology stocks, U.S.-Iran escalation, and a regional Federal Reserve president calling for “modestly higher” interest rates.
The world’s largest cryptocurrency was last down 0.9% to $64,216.3 by 17:41 ET (21:41 GMT).
Positive cues on inflation countered by Dallas Fed comments
Crypto market participants and watchers of monetary policy have been keenly focused on this week’s U.S. economic calendar for interest rate cues.
Earlier this week softer-than-anticipated U.S. consumer price index (CPI) and producer price index (PPI) reports for June arrived. On Thursday, data from the U.S. Census Bureau showed retail sales ticking up 0.2% M/M in June to $768.6 billion, matching expectations. Retail sales from gasoline stations slipped 5.3% M/M in June to $60.6 billion, as global oil prices slumped following the signing of an interim peace deal between the U.S. and Iran.
Separately, the U.S. Department of Labor said the number of Americans filing for initial jobless claims in the past week fell to 208k, lower than the consensus estimate of 216k. The reading pointed at continued resilience in the labor market.
The combination of easing price pressures and gasoline station retail sales suggests some breathing room for the Fed in terms of not having to immediately hike interest rates. According to the CME FedWatch tool, the odds of a quarter-point rate hike at the end of the July 28-29 meeting have fallen significantly from a week ago. But some comments from Dallas Fed President Lorie Logan later on Thursday cast a hawkish spell.
“I currently believe modestly higher interest rates would better balance the outlook and risks for the (Federal Open Market Committee)’s dual mandate goals,” the voting member of the central bank said in prepared remarks at the Dallas Fed’s Houston Branch.
“The June CPI data do suggest the possibility of a more hopeful scenario where inflation returns all the way to target. Besides the sharp decline in energy prices, core goods prices fell as the effects of tariffs receded. Non-housing core services prices were surprisingly soft, and housing costs moderated. If the trends in housing and non-housing services continue, overall inflation could fall further,” Logan said.
“Still, that path is tenuous. It relies on avoiding further price pressures from energy shocks in the near term and from strengthening demand in the medium term. For now, it is more a hope than a likelihood,” she added.
Higher rate environments tend to weigh on speculative assets such as cryptocurrencies.
The inflation dynamic has been further complicated this month by the biggest escalation in tensions between Washington and Tehran since they inked their interim agreement in mid-June. Oil prices have posted double-digit percentage gains this week as a result, with Brent crude futures, the global benchmark, having soared more than 11%.
The U.S. military on Thursday said it was conducting a new wave of strikes against Iran, the latest in a sustained bombardment for five consecutive nights. The fresh fighting erupted after reported Iranian attacks on commercial tanker ships in and around the Strait of Hormuz, leading to a collapse in the ceasefire between the two sides. President Donald Trump has vowed further attacks on Iranian infrastructure if Tehran doesn’t come to the negotiating table.
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Strategy CEO says debt risks only arise if Bitcoin falls to $8k-$10k
Top corporate holder Strategy’s top boss Phong Le said in a Bloomberg TV interview on Tuesday that the company remains a long-term buyer of Bitcoin, and risks with its treasury model are only expected if the crypto falls to $8,000 to $10,000.
“My objective would be the largest buyer of Bitcoin for the foreseeable future,” Le said.
His comments come after Strategy sold over $215 million worth of coins earlier this month, while also announcing no new Bitcoin purchases for nearly a month.
The development sparked concerns over just how viable the company’s long-term strategy was, especially given that it faces mounting obligations for the capital and debt it issued to fund its Bitcoin purchases.
While the recent sales represent a small portion of Strategy’s overall holdings, any sustained selling by the company presents a major risk to Bitcoin’s price, given the scale of the company’s treasury.
