Financial Market Analysis: Bitcoin Falls While Gold Rises

Jul 07, 2016 at 11:54 // Price

Today the Bitcoin price fell sharply to the level of $640. The reason for this decrease may be a decrease in the forthcoming reward for Bitcoin block mining. In this situation, investors choose to close positions and prefer not to take risks.

Another important factor that has an effect on the Bitcoin price today was the strong macroeconomic statistics from the US. The ISM index for the services sector increased by 56.5%. This is the highest level since 2015. A published report on the ISM in the service sector gives reason to believe that the Federal Reserve won’t raise interest rates this year. Positive economic data from the US and an optimistic outlook on the expected number of people employed in non-agricultural sectors, stocks of oil and the level of unemployment make US assets very attractive for investors.

The uncertainty in the European markets

European trading platforms, on the contrary, ended the day in the red zone. As before, the largest decline is in the shares of the banking sector. Shares of UniCredit fell by 3.3%, Deutsche Bank by 5.56%. The uncertainty in the European markets and the decline of banking sector share prices had a negative impact on the Euro.

The UK is still experiencing the results of the referendum. The yields of ten-year government bonds is reduced in comparison with government bonds in Europe and the United States. Shares in the UK banking sector get sold the same as in Europe.

Today we expect the publication of the report on the change in industrial production in May, 2016. The forecast is 1.0% m/m against the previous value of 2.0% m/m. Moreover, the British Pound dropped to 1.29, and pressure on the Pound will increase.

While financial markets struggle with volatility, gold’s price continues to rise. According to Comex, the New York Mercantile Exchange, the price of gold rose to $1370.40 per troy ounce. With expectations that the consequences of the Brexit may drag on for a long period, investors prefer to switch into safe assets. 

This analysis and forecast are the personal opinions of the author and are not a recommendation to buy or sell Bitcoins.