Bitcoin holds below $65K as PMI data revives stagflation fears

Bitcoin held near $64,000 Thursday, down 0.5 percent, as US ISM Services PMI data showed prices paid at 70.3 while employment slid to 47.4.

"The odds of stagflation are intensifying," The Kobeissi Letter said on X, citing the combined PMI readings showing rising prices and a weakening labor market.

The ISM Services PMI rose 0.1 point to 54.1 in July, while employment dropped 3.6 points to its lowest since March. Prices paid surged 2.6 points to 70.3, near the highest since October 2022, and have risen 16.9 points since March 2024. Glassnode described Bitcoin's action as showing "boredom rather than capitulation," noting the asset's divergence from gold's six-week highs and the S&P 500's record levels.

Bitfinex Research said a "genuine breakdown" requires something more forceful, while the market awaits further macro cues. With Iran tempering expectations over the Strait of Hormuz reopening, WTI crude held near $76 per barrel after hitting three-week lows of $74.30.

PMI Data Points to Stagflation Risk

The Kobeissi Letter's analysis highlighted a growing divergence in the US economy: the services sector expanded while employment contracted. Prices paid have now trended higher for over two years, rising 16.9 points since March 2024, according to the trading resource. The combination of rising input costs and a weakening jobs market creates a policy dilemma for the Federal Reserve, which must weigh inflation control against growth support.

Iran's Deputy Foreign Minister Kazem Gharibabadi said a potential deal with Oman to reopen the Strait of Hormuz "does not, in itself, mean that the Strait of Hormuz will reopen," according to CNN. The uncertainty kept oil prices range-bound as markets weighed geopolitical risk against demand concerns. US WTI crude was little changed at $76 per barrel, having hit three-week lows of $74.30 the day prior.

Bitcoin's Divergence From Risk Assets

Glassnode noted that Bitcoin's lack of reaction comes as gold hits its highest levels in six weeks and the S&P 500 reaches all-time highs. The analytics firm summarized the regime as "a compressed, under-owned market that global risk appetite has left behind, with bottom conditions assembling but incomplete."

Bitfinex Research echoed this view, writing that "while macro developments and bitcoin's underperformance compared with the Nasdaq and S&P 500 signal underlying stress, a genuine breakdown requires something more forceful, followed by volume-supportive price action."

The market's indecisiveness means Bitcoin remains trapped in a range that has persisted since the start of June, with the $65,000 level serving as immediate resistance and $64,000 as near-term support. ETF flows and macro conditions will determine whether the current compression resolves to the upside or breaks lower. The divergence from traditional assets highlights Bitcoin's evolving market dynamics, where institutional flows increasingly shape price action independent of equity market moves. For traders, the key question is whether sustained ETF inflows can offset the drag from stagflation concerns, or whether a break below $64,000 triggers a deeper correction toward the cycle's next macro floor.

This article is for informational purposes only and does not constitute investment advice.