Strong early rally gives way to sharp reversal
Bitcoin wrapped up a tough second quarter (Q2) with a decline of 14.20%, broadly in line with gold (-14.15%) and silver (-24.21%) as the debasement trade came under pressure. You can read all about the debasement trade in this article here from yesterday.
The second quarter of 2026 began with Bitcoin trading around the $68,000 level before a strong risk-on rally pushed it more than 20% higher to a peak of $82,833 in early May. That move ran in tandem with a similar approximately 20% gain in the Nasdaq 100. However, the two risk assets soon decoupled, with the Nasdaq continuing its climb, driven by renewed artificial intelligence (AI) enthusiasm, while Bitcoin turned lower.
The initial selling pressure in Bitcoin came from profit-taking ahead of a significant band of technical resistance, including the 200-day moving average near $83,250 and trend-channel resistance around $83,000 (projected from the February low near $60,000). We highlighted the importance of this zone in our early May note here:
‘Bitcoin’s overnight gains have pushed it squarely into a significant resistance zone between $81,000 and $83,500’, and that ‘a failure to clear the $81,000 – $83,500 resistance zone in the coming sessions could lead to another round of profit-taking and a retest of the lower boundary of trend channel support near $69,000.’
While the technical barriers slowed the advance, the real damage came in mid-May after the release of warmer-than-expected United States (US) consumer price index (CPI) and producer price index (PPI) prints for April. The warmer inflation data reinforced fears that surging oil prices were feeding into broader price pressures and was the final catalyst for the US rates market to flip from pricing in Federal Reserve (Fed) rate cuts to pricing in rate hikes.
That shift triggered fresh liquidations across the debasement trades – gold, silver and Bitcoin included. Bitcoin was pushed down to a low of $59,100 in early June, exacerbated by leveraged selling and notably by chunky outflows from major institutional players, including BlackRock.
While Bitcoin attempted a recovery from the $59,100 low, the Federal Open Market Committee (FOMC) meeting in mid-June under new Fed Chair Kevin Warsh proved more hawkish than expected, sending the debasement trades – Bitcoin, gold and silver – lower once again. The knock-on effect has seen Bitcoin start the third quarter (Q3) on the back foot, hitting a fresh 21-month low as it dipped below $58,000 to around $57,735.
All eyes on payrolls as Q3 begins
In the short term, whether Bitcoin finds its footing or takes another leg lower will depend heavily on tomorrow night’s US non-farm payrolls report. A solid print showing continued labour market resilience would likely reinforce expectations of a Fed rate hike before year-end, adding further pressure on the debasement trades.
Conversely, a softer-than-expected non-farm payrolls print could ease rate hike fears, support risk assets and give Bitcoin some much-needed breathing room as we head into the new quarter.
In the medium term, the biggest question is whether the run of data in the coming months proves strong enough to force the Fed’s hawkish bias into action, especially knowing that single rate hike cycles are extremely rare.