It was a week where there was more good news than ever before, but one bad news sent investors into a labyrinth. Bitcoin, which was hovering around $67,000 last Monday, rose to nearly $72,000 as positive indicators continued to emerge in the U.S. job market .
Let’s briefly summarize the indicators. On the 4th (Tuesday), the Job Recruitment and Job Turnover Report (JOLTs) released by the U.S. Department of Labor was found to be worse than expected. The May Automatic Data Processing (ADP) non-agricultural employment change released on Wednesday the 5th was also worse than expected. The number of new U.S. unemployment claims announced on Thursday the 6th was also worse than expected.
Industry experts believe that the current rise in Bitcoin largely reflects expectations of a U.S. interest rate cut. If the US employment figures show a worsening situation, it is advantageous for the Bitcoin price because the possibility of an interest rate cut increases .
The problem was the U.S. Department of Labor's employment report released on Friday the 7th. The cryptocurrency market briefly fell into fear as employment increased to 272,000, exceeding expectations by nearly 100,000 . The price of Bitcoin, which had risen to around $72,000, fell to the $68,000 level , and the decline in altcoins was even stronger.
What is interesting is that the U.S. unemployment rate for May, which was also announced today, was 4.0%, up 0.1% from the previous month. This is the highest since January 2022. In other words, some indicators show good employment, while others show bad employment. It seems necessary to wait a little longer to see what signals the mixed US employment indicators are ultimately sending.
Last week, there was clear positive news other than employment. The point is that the seven major countries (G7) have begun to reduce interest rates . The Bank of Canada (BoC) lowered its base interest rate by 0.25 percentage points from 5.0% to 4.75% on the 5th (local time). The European Central Bank (ECB) lowered its base interest rate from 4.0% to 3.75% a day later on the 6th. This is the first time that the G7 countries have lowered interest rates since the COVID-19 incident.
Arthur Hayes, one of the cryptocurrency industry influencers , commented on this, saying, “The fireworks started by the central bank will bring cryptocurrency out of the recession.” Although it is still unclear whether the United States will participate in the interest rate cut or not, if the G7 all begin to lower interest rates, that in itself will have meaning in increasing global liquidity.
It is also good news that investment funds have begun to flow actively into the U.S. Bitcoin spot ETF market again. The cumulative inflow over the past three weeks since early May amounts to $2.44 billion . In particular, on the 4th , $886.6 million, the second largest amount ever, flowed into the Bitcoin spot ETF, creating a hot topic. The average number of Bitcoins mined per day is about 450, and tens of thousands of Bitcoins are being purchased in ETFs alone .
As a result, expectations for Ethereum, which has not shown any significant follow-up gains despite partial approval of the spot ETF, still appear to be alive. Some analysts say that once the ETF is launched, there will be an inflow of $569 million every month . However, Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), poured 'cold water' on the issue, saying that the final approval of the Ethereum spot ETF may be delayed somewhat .
This week is expected to be the most important time for the Bitcoin price in the short term. This is because there is a big question mark over the possibility of an interest rate cut that was considered acceptable until last week.
First, the US Consumer Price Index (CPI) will be announced on Tuesday the 12th, and the US Producer Price Index (PPI) will be announced on the 13th (Thursday). Considerable volatility is expected as it is an indicator that provides a glimpse into changes in prices, which is another axis that increases the possibility of a US interest rate cut.
Between price announcements, the U.S. Federal Reserve (Fed) holds an Open Market Committee (FOMC) meeting in June and announces the base interest rate. The FOMC decision to freeze interest rates is likely. However, what Chairman Powell says at the press conference regarding future policy direction is likely to have a significant impact.
On the 14th, the last business day, there will be a speech by Finance Minister Yellen and an interest rate decision by Japan, one of the G7 countries. In other words, indicators that have an impact on the Bitcoin price will be announced on both Tuesdays and Thursdays this week. We hope our readers make wise investment decisions.
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