On Friday, the value of bitcoin declined slightly by 0.21%. This decline followed a 0.04% decrease on the previous day, leading to a closing price of $16,802. Interestingly, bitcoin could not regain the $17,000 mark for the third day in a row, resulting in a three-day losing streak.
During the morning, the price of bitcoin remained relatively stable. However, it dipped to $16,770 in the afternoon before climbing to $16,966 later in the day. This fluctuation is likely under the influence of various economic indicators from the United States, which indicated the initial impact of the Federal Reserve’s bold monetary policy measures.
Mixed Signals from US Economic Indicators and the NASDAQ Index
US economic indicators on Friday indicated a slowing economy and lower inflation while also increasing consumer confidence. Personal spending grew by a small amount, 0.1%, while personal income increased by 0.4%.
Orders for durable goods decreased by 2.1% in November, reversing a 0.7% increase in the previous month. The increase in personal spending may be due to consumers becoming more cautious due to increased economic uncertainty.
However, inflation figures were favorable for bitcoin as the Core PCE Price Index rose 4.7% year-over-year in November, compared to 5.0% in October, and the Michigan Inflation Expectations Index dropped from 4.6% to 4.4%.
This decrease in inflation expectations improved the Michigan Consumer Sentiment Index, which rose from 56.8 to 59.7 in December. The NASDAQ Index responded to these numbers by increasing by 0.21%, and the S&P 500 gained 0.59%.
The Federal Reserve can adopt a less aggressive approach to interest rates given the weak personal spending and lower inflation numbers. However, with the current unemployment rate at 3.7%, below the Fed’s target of 5.0%, there is still the possibility of another 50-basis point hike.
Investors should pay attention to any relevant updates in the crypto market over the weekend, particularly regarding FTX and regulatory developments. Unfortunately, trading volumes will likely be lower due to the holiday season.
Rise in Fear & Greed Index Despite BTC Decline
The BTC Fear & Greed Index increased from 27/100 to 29/100 today, aided by a bullish NASDAQ Index. Experts believe that the Federal Reserve’s monetary policy measures are beginning to take effect, potentially benefiting those in favor of the Fed’s dovish stance before the February interest rate decision. This belief relies on the mixed signals coming from US economic indicators.
Investors hope for an economic soft landing to support BTC and the crypto market going into 2023. The principal near-term goal is to avoid a score below 20/100 on the Fear & Greed Index. For BTC to make a run towards $20,000, the bulls will need to target a score of 40/100, similar to the pre-FTX collapse level seen on November 6.