Fed Caution Limits Bitcoin's Breakout Potential
The recent US GDP miss did not have the expected bullish impact on Bitcoin, as strong consumer spending and persistent inflation reduced pressure on the Federal Reserve to ease monetary policy. The economy grew at a 1.5% annualized rate in the second quarter, below forecasts of 2.1%. However, household spending accelerated at a 3.2% pace during the quarter, while business investment in equipment remained robust.
The Fed's caution is due to the resilience of domestic demand and inflationary pressures, which could intensify disagreements within the central bank after three officials voted for raising rates last week. The combination of stronger household spending, business investment, and persistent inflation gives the Fed less reason to respond with easier policy.
Bitcoin briefly topped $65,000 on Thursday but failed to sustain its move above this level due to weak participation in the market. Spot trading volume has fallen to its lowest level since 2019, while combined exchange deposits and withdrawals are near their quietest levels in three years.