Falling cryptocurrencies like Bitcoin, Jasmy, and Avalanche could face further downsides after the U.S. published strong gross domestic product and jobless claims data.

Bitcoin

Bitcoin’s price retreated by almost 4% on Thursday and was trading at $63,950. Other altcoins, like JasmyCoin and Avalanche, performed worse, falling by over 10%. The two have slipped for four consecutive days and are hovering at their lowest swings since July 14.

Most of this decline is likely because of the ongoing liquidation of Bitcoin from Mt.Gox wallets. Kraken has already distributed its coins, while Bitstamp will move coins worth $3 billion on Thursday.

US GDP and Jobless Claims Data Impact

The other risk facing Bitcoin, altcoins, and stocks is that the U.S. economy is doing better than expected. The Bureau of Economic Analysis reported that the economy expanded by 2.8% in the second quarter, beating the median estimate of 2.0%. This was also better than Q1’s growth of 1.4%.

Another report revealed that initial jobless claims dropped from 245,000 to 235,000 last week, which was also better than the median estimate of 237,000.

Two better than expected US economic data releases: Q2 GDP grew by 2.8%, significantly higher than the consensus forecast of 2.0%. Weekly jobless claims fell by 10,000 to 235,000.

These numbers mean that the Federal Reserve may decide to hold rates higher for longer than expected. In previous statements, Fed officials have expressed concerns that the economy was slowing, particularly the labor market, as the unemployment rate rose to 4.1% in June, its highest point since 2021.

However, economists expect the Fed will leave interest rates unchanged in its upcoming meeting. The CME Fed Watch tool estimates that the bank will cut rates in September.

Looking ahead, the next crucial economic data to watch will come out on Friday when the US will publish the personal consumption expenditure (PCE) data, the Fed’s favorite inflation gauge.

Implications on Bitcoin, Jasmy, Avalanche and Altcoins

A hawkish Fed would be negative for Bitcoin and other altcoins because these assets perform better in a low-interest rate environment. For example, Bitcoin hit a record high of $68,000 in 2021 when the Fed brought interest rates to zero.

Steeper rate cuts would incentivize investors to move to riskier assets. Some of these investors would move from money market funds, which have over $6.1 trillion in assets, to other assets like stocks and cryptocurrencies.

Bitcoin and Ethereum will likely see more inflows from institutional investors now that the SEC has approved spot BTC and Ether ETFs.

Technical Analysis and Future Outlook

The other risk that altcoins face is based on technical issues. Bitcoin’s retreat happened after failing to pierce the descending trendline that connects the highest swings since March. This indicates that the coin could see more downside as sellers target the key support at $60,000.

On the positive side, Bitcoin has formed a falling broadening wedge pattern, a popular sign of a bullish continuation. This means that the coin may have some upside, but only if it crosses the descending trendline.

For more updates on the latest trends in cryptocurrencies, investing, and finance, stay tuned to Global Crypto News.

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