Stronger-than-expected US economic data and fading bets on a March Fed rate cut weighed on demand for BTC-spot ETFs, adding to the bearish sentiment. Despite this week’s pullback, the medium-term outlook remains bullish.
Below, I consider the key drivers behind recent price trends, the short-term outlook, the medium-term trajectory, and the key technical levels traders should watch.
US Jobs Report and Consumer Sentiment Signal Robust Economy
US economic indicators weighed on demand for BTC. Unemployment fell from 4.5% in November to 4.4% in December, while average hourly earnings rose 3.8% year-on-year in December (November: 3.6%).
Typically, tighter labor market conditions and higher wages fuel consumer spending and demand-driven inflation, cooling Fed rate cut bets.
The Michigan Consumer Sentiment Index increased from 52.9 in December to 54.0 in January, adding to the positive sentiment toward the US economy. An upswing in sentiment signaled a pickup in private consumption, which accounts for around 60% of the US GDP.
BTC climbed to a January 9 high of $92,011 before dropping back to $90,000 on sentiment toward the Fed rate path. According to the CME FedWatch Tool, the chances of a March cut fell from 51.1% on January 2 to 28.7% on January 9.