Between Inflation and Weak Employment, Bitcoin Remains Trapped in Its Narrow Range

Financial markets are hitting record highs, gold is regaining its status as a safe haven, but Bitcoin remains stuck below $65,000. This inertia contrasts sharply with the euphoria observed in traditional assets and raises questions among investors. Indeed, the return of stagflation fears in the United States, persistent tensions in the Middle East, and a more uncertain macroeconomic environment are clouding the outlook. Why does the leading cryptocurrency remain sidelined while other markets advance? This divergence could signal a turning point for the market.

In Brief

• The prices paid index skyrockets to 70.3 while employment plummets to 47.4, rekindling fears of an economic shock.
• Despite exchanges between Iran and Oman, the reopening of the Strait of Hormuz remains uncertain without the United States.
• Stuck below $65,000, BTC stagnates away from the historical highs of the S&P 500 and gold.
• Glassnode observes a phase of apathy rather than panic or capitulation among crypto investors.

Macroeconomic and Geopolitical Tensions

The latest economic indicators from the United States published by the Institute for Supply Management provide a mixed outlook for global economic prospects. The simultaneous release of the ISM services index data and employment figures reflects a concerning failure of fundamentals across the Atlantic. This dual trajectory reveals an intensifying risk of stagflation over the months, placing the Federal Reserve and investors in a complex dilemma where inflation is rising again while real activity is slowing significantly.

On the geopolitical front, the absence of a positive catalyst reinforces the overall caution of operators and newsrooms. The possibility of an agreement between Iran and Oman to reopen the strategic maritime route of the Strait of Hormuz has not been enough to restore market confidence. In the absence of direct U.S. participation, the effective resumption of international trade remains highly uncertain.

Iranian Deputy Foreign Minister Kazem Gharibabadi has sought to temper expectations in an interview with the state news agency IRNA. He stated that "this agreement does not, in itself, mean that the Strait of Hormuz will reopen." In this climate of waiting, the price of U.S. WTI crude oil has stabilized around $76 per barrel, after hitting a three-week low of $74.30 the day before.

Here are the key figures from the ISM report in detail:

• The services PMI index: it records a minimal increase of 0.1 points in July to settle at 54.1;
• The employment index: it suffers a sharp drop of 3.6 points to fall to 47.4, marking its lowest level since March;
• The prices paid index: it jumps by 2.6 points to reach 70.3, marking a continuous increase of 16.9 points since March 2024.

This simultaneous deterioration has led the analysis firm The Kobeissi Letter to emphasize that "the economy is increasingly under pressure, both due to rising prices and a weakening labor market."

Bitcoin Shunned by Investors

Faced with these external tensions, the price of bitcoin fluctuates without conviction above $64,000, showing a daily decline of about 0.5% as U.S. stocks open on a neutral note. Stuck in a narrow range since the beginning of June, the asset is significantly lagging behind stock markets and safe-haven assets. Analysts from the on-chain analysis platform Glassnode perfectly summarize this dynamic with a synthetic observation: "The regime in one line: a compressed market, under-diverted that the overall risk appetite has left behind, with low-point conditions assembling but remaining incomplete."

This situation reflects a profound change in attitude among investors. Rather than observing panic movements or massive capitulation, the market is sinking into a prolonged period of disinterest. Glassnode thus describes the current mindset of investors as "boredom rather than capitulation." The absence of bitcoin's reaction to the rising power of gold and the peaks of stock indices reveals a temporary disaffection of institutional capital for the crypto asset class.

In Search of a Macroeconomic Floor: Prospects for Crisis Exit

To break this stagnation, experts believe that a signal of unprecedented magnitude will be essential to determine the future trajectory of the price. The research team at Bitfinex Research urges caution before anticipating a recovery or a sharp drop: "Although macroeconomic developments and bitcoin's underperformance compared to the Nasdaq and S&P 500 signal underlying stress, a true break requires something more impactful, followed by price action supported by volumes."

Some analysts do not hesitate to draw comparisons with the bear market of 2022, fearing a gradual erosion of current support levels before reaching a definitive macroeconomic floor.

Ultimately, bitcoin appears trapped between the deterioration of macroeconomic indicators and a widespread apathy among investors. While the intensification of stagflation fears could theoretically restore meaning to the asset's alternative store of value properties, the current absence of volumes imposes the greatest restraint. However, the history of financial cycles shows that such phases of extreme compression almost always precede particularly violent market movements, leaving investors awaiting a decisive trigger.