Meanwhile, this price drop following the U.S. employment report offers a good buying opportunity, according to Singapore-based trading firm QCP Capital.
Non-farm payroll data on Friday showed that the U.S. economy added 272,000 jobs in May, significantly higher than the estimated 182,000 jobs, and much more than the downwardly revised reading of 165,000 jobs in April. While the unemployment rate rose to 4%, the average hourly earnings increased by 0.4% month-on-month, above the expectations of 0.3%.
Markets immediately reduced the probability of a 25-basis point Federal Reserve rate cut in September to 60% from 85%, leading to a decline in risk assets, including cryptocurrencies.
JP Morgan and Citi canceled their forecasts for a Federal Reserve rate cut in July, with some analysts putting rate hikes or further liquidity tightening back on the agenda. Bitcoin, which seemed poised to break the $72,000 barrier, fell by almost 3% to $68,400. Ethereum followed Bitcoin’s lead.
QCP Capital said the Federal Reserve would struggle to keep interest rates high while other central banks are lowering borrowing costs.
The report stated: “The non-farm payroll report surprised us, as it was confusing enough to stimulate risk aversion ahead of U.S. inflation numbers and this week’s Federal Reserve meeting.”
“We agree that this is a good buying opportunity as markets will increasingly price in at least one Federal Reserve rate cut. It will be difficult for the U.S. to ignore this as the rest of the world continues to cut interest rates.”
The European Central Bank and Bank of Canada cut interest rates last week, as the Group of Seven (G7) began a cycle of monetary easing.
Other central banks, including the Federal Reserve, may soon join the fray by cutting interest rates, leading to increased market liquidity, which inadvertently boosts demand for alternative investments like cryptocurrencies.
Source: Cryptocurrency - investing.com
