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Why is the cryptocurrency market down today?
After the slight decline of 0.48% on Thursday, the bears took over Bitcoin Last night. With a sudden drop in Bitcoin price by 2.05% on Friday, major altcoins surged and the entire cryptocurrency market turned 180 degrees for a sharp retreat.
With the Ethereum price down 3.56% and Solana down 4.49%, the major altcoins return to the nearest support levels. The meme coin sector, which has performed well in recent weeks, took a hit with top performers such as PEPE falling 10.49%, Floki 11.87% and WIF 11.58% .
Crypto market’s overnight bearish reversal wipes out $360 million in long liquidations, per Coinglass. Meanwhile, the US Bitcoin ETF maintaining a positive outlook with a total daily net inflow of $130.99 million, with IBIT bringing in the majority of $168 million. This marks the 19th positive day, but also reflects a downward trend in inflows following the second-largest daily inflow of $886 million recorded on Tuesday.
US jobs reports cause Bitcoin to tumble
On June 7, the price of Bitcoin fell from $70,771 to close the day at $69,326, an intraday decline of 2.05%. This sudden move by the cryptocurrency market leader is profoundly influenced by the US May employment report released yesterday by the Department of Labor.
The US Department of Labor presents a report highlighting the addition of 272,000 jobs last month. This is well above the expected number of 185,000 and unprecedented compared to the previous month’s figure of 165,000 jobs.
Furthermore, the superpower is experiencing an increase in the unemployment rate, which has reached a peak of 4%, reaching January 2022 levels.
Report on the actual influence of work on cryptocurrencies
With the unemployment rate rising in the United States, the cryptocurrency market reacts quickly as profit bookings begin. But why? Well, even though unemployment is rising, the Fed is unlikely to cut interest rates in the near future. It could be because there are signs that the economy is still strong in other areas, such as job growth.
Therefore, if the Fed decides to cut rates too soon, inflation could rise, which is already a cause for concern.
Now, why did the market crash? In simple terms, the employment data limits the chances of the US Fed cutting rates. The market as a whole expected a rate cut at the next Federal Open Market Committee (FOMC) meeting on June 12.
Why does the cryptocurrency market need a rate cut? Well, with a potential rate cut, the market will experience increased demand with lower borrowing costs and liquidity will increase. Therefore, rate cuts are the next catalysts to fuel the bull market and push Bitcoin and altcoin prices higher.
Will Bitcoin continue its uptrend?
After crashing below the $70,000 level overnight, Bitcoin price is trading at a sluggish pace at $69,343. In the absence of any major movements in the early Asian hours, a Doji candle is visible, trying to find support.
In the 1D chart, it is visible that the Doji attempts to take support at the trend-based Fibonacci level of 23.60%. However, the cryptocurrency price action shows the bearish engulfing candle formed last night, completing an evening star.
Furthermore, the continuous rejections starting from the $70,000 mark and above reveal a huge supply at this psychological level. The uptrend 50D EMA may soon provide dynamic support with the daily RSI holding above the halfway line.
Therefore, the overnight pullback is most likely a quick FUD reaction to the employment data. The potential recovery of the cryptocurrency price by this project will reach $71,000 before the FOMC meeting on June 12.
Due to the recent aggressive data, the possibility of a sharp movement in Bitcoin on the day of the FOMC meeting is high.
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