Bitcoin and ETH have lost momentum since hotter-than-expected US jobs data on Friday dampened hopes of an interest rate cut by the US Federal Reserve (Fed) in September.
According to QCP Capital, a trading company based in Singapore, the decline in the prices of the two largest cryptocurrencies in terms of market Capital following the report offers a good opportunity to profit.
Friday's nonfarm payrolls data showed the U.S. economy added 272,000 jobs in May, more than the 185,000 estimated and well above the downwardly revised 165,000 in April. Unemployment rate rose to 4%, Medium hourly earnings ( Dai inflation component) increased 0.4% over the previous month, higher than expectations for a 0.3% increase.
Markets immediately downplayed the possibility of the Fed cutting interest rates by 25 basis points in September from 85% to 60%, sending risk assets, including cryptocurrencies, lower. JPMorgan and Citi scrapped forecasts for a Fed rate cut in July, while some observers put rate hikes or additional liquidation tightening back on the agenda. According to the data, Bitcoin was tipped to break above $72,000 but actually fell nearly 3% to $68,400. ETH also followed suit.
QCP Capital said the Fed will have difficulty keeping interest rates high while other central banks reduce borrowing costs.
“Strong increase in NFP surprise (272,000 vs 182,000), higher payrolls accompanied by higher unemployment rate (3.9% to 4%). That's disruptive enough to reduce risks to the US and FOMC inflation numbers. We agree that this is a good opportunity to buy the dip as the market will increasingly price in at least one Fed rate cut from here. The US will be hard to ignore as the rest of the world continues to cut interest rates,” QCP Capital said.
The European Central Bank (ECB) and Bank of Canada cut interest rates last week, prompting the G7 to begin an easing cycle. According to MacroMicro, the number of central banks making the most recent moves to cut interest rates has increased this year.
Other central banks, including the Fed, may soon join the fray in tit-for-tat interest rate cuts (often called currency wars) as part of their strategy to manage debt. their rising public debt, unintentionally fueling demand for alternative investments like cryptocurrencies.
“We have seen bullish flows during this pullback, both aggressive Put sellers and Call spread buyers, especially in BTC.”
Bitcoin and ETH were little changed over the weekend as OI (open interest)* and volume fell following a $400 million leveraged liquidation on Friday, dampening market momentum.
However, analysts at Presto Research said in a market brief that they expect market volatility to return next week with macroeconomic catalysts such as Wednesday's CPI release. , the FOMC meeting on Thursday and Janet Yellen's speech on Friday.
A record leverage increase for Bitcoin Futures Contract hurt bulls as markets plunged on Friday following the release of nonfarm payrolls (NFP) figures. BTC fell sharply after the data release, from $71,000 to $69,000.
On the other hand, the drop in meme stock GameStop (GME) appeared to weigh on riskier assets such as altcoins and memecoins, with major meme Dogecoin (Doge) and Shiba Inu (SHIB) losing up to 10%.
Since Friday, open interest across various Token has dropped from $99 billion to $60 billion, suggesting traders have significantly reduced their bets. Coinglass data shows a 10% decrease in volume over the past 24 hours.
BTC traded at $69,462 on Monday, while ETH traded around $3,675. SOL and XRP decreased slightly. BNB lost 5.5% as traders likely took profits after rising to a high of more than $710 last week.
* OI (open interest) represents the total number of unliquidated Derivative contracts in the market at a given time. It is an important indicator to evaluate market activity and investor sentiment.
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