US PMI Drop Puts Pressure on Bitcoin and Crypto Market Amid Cooling Business Activity

The broader cryptocurrency market has come under selling pressure in the last 24 hours with Bitcoin losing nearly 4% and top ten altcoins falling anywhere between 4-10%. At press time, the Bitcoin price is trading 3.67% down and slipping under $64,500 as macro conditions show weak demand in the US economy.

US Business Activity Cools Down

On Tuesday, S&P Global reported that its preliminary U.S. Composite PMI Output Index, monitoring both manufacturing and services sectors, declined to 50.9 this month from 52.1 in March. A reading above 50 signifies expansion in the private sector.

In April, business activity in the United States eased to its lowest level in four months, attributed to diminished demand, while inflation rates saw a slight decrease despite notable rises in input costs. These developments hint at potential relief ahead, aligning with the Federal Reserve’s search for indications that economic activity is tapering enough to alleviate inflationary pressures.

Despite the Federal Reserve implementing 525 basis points of interest rate hikes since March 2022 to curb inflation, the United States remains ahead of its global counterparts. However, the Fed has recently expressed concerns over persistent inflation and robust employment figures, indicating that its efforts to bring inflation down to the target rate of 2% have encountered setbacks or reversals.

The upcoming Federal Reserve meeting is likely to maintain the policy rate within the current range of 5.25% to 5.50%. In the previous week, several Fed officials refrained from suggesting any rate cuts for the year, emphasizing the need for continued restrictive monetary policy due to recent economic data.

Bitcoin Sub $60,000 Levels Possible

Peter Schiff, a prominent critic of Bitcoin, expressed his pessimism, warning holders to brace themselves. He emphasized the importance of Bitcoin maintaining its position above $60,000, cautioning that failure to do so could lead to a significant decline. Schiff highlighted that while seasoned Bitcoin enthusiasts are accustomed to substantial price drops, newcomers who have invested in ETFs may be in for an unpleasant surprise.

The Bitcoin critic initiated his commentary by suggesting that the decline in gold’s value may have reached its conclusion. Despite trading slightly above $2,300, he likened this price to gold’s new benchmark of $2,000. Schiff identified a resistance point for gold at $2,400, anticipating it to be short-lived. In contrast, he remarked that Bitcoin’s prospects diverge from those of gold.