Bitcoin (BTC) Drops Below $69,000 Due to Strong US Employment Data and Concerns Regarding Interest Rate
After experiencing a slight pullback of 0.48% on Thursday, Bitcoin faced a significant downturn on Friday with a 2.05% crash. This downturn caused a reversal in the upward trend of major altcoins and the entire crypto market. Ethereum and Solana saw price declines of 3.56% and 4.49% respectively, leading top altcoins to retrace to their nearest support levels. The meme coin sector, which had been performing well in recent weeks, also saw declines, with top performers like PEPE, Floki, and WIF crashing by double-digit percentages.
The overnight bearish trend in the crypto market resulted in $360 million in long liquidations, according to Coinglass. Meanwhile, U.S. Bitcoin ETFs maintained a positive outlook, with a daily total net inflow of $130.99 million. IBIT contributed the majority of this influx, bringing in $168 million. Although this marks the 19th consecutive positive day, there is a declining trend in the inflows following the second-largest daily inflow of $886 million on Tuesday.
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The U.S. Job Reports Plunge Bitcoin
The U.S. May jobs report, released by the Labour Department on June 7th, triggered a significant decline in the price of Bitcoin, dropping from $70,771 to $69,326, representing a 2.05% intraday decrease. The report revealed the addition of 272,000 jobs last month, surpassing the expected figure of 185,000 and significantly exceeding the previous month’s data of 165,000 jobs. Additionally, the unemployment rate increased to 4%, reaching levels not seen since January 2022.
The Major Influence Of Jobs Report on Crypto
The rise in the unemployment rate prompted profit bookings in the crypto market due to the likelihood that the Fed would not reduce interest rates in the near future. This reaction is driven by the belief that despite the increase in unemployment, the overall strength of the economy in other areas, such as job growth, indicates that the Fed is unlikely to cut rates prematurely. The anticipation of a rate cut in the upcoming Federal Open Market Committee (FOMC) meeting on June 12 had been a contributing factor to the market downturn.
The employment data diminishing the potential for a U.S. Fed rate cut is seen as a negative signal by the broader market. Rate cuts are anticipated to stimulate demand with lower borrowing costs and increased liquidity, serving as catalysts to fuel the bull market and drive the prices of Bitcoin and altcoins higher.
Is Bitcoin Bull Run Set to Continue?
Following the overnight crash under the $70,000 level, Bitcoin is currently trading at $69,343 and displaying limited movement in the early Asian trading hours. The price action suggests a search for support, as indicated by the presence of a Doji candlestick in the 1D chart, attempting to find support at the 23.60% trend-based Fibonacci level. However, the formation of a bearish engulfing candle and an evening star pattern suggests a potential downward trend.
The $70,000 psychological level has exhibited significant selling pressure, as evidenced by repeated rejections from and above that point. On the positive side, the 50-day exponential moving average (EMA) is expected to provide dynamic support, with the daily relative strength index (RSI) remaining above the halfway line.
The overnight pullback is interpreted as a rapid fear, uncertainty, and doubt (FUD) reaction to the employment data, and there is potential for the crypto price to recover to $71,000 before the FOMC meeting on June 12. Nonetheless, the recent hawkish data increases the likelihood of a significant movement in Bitcoin on the day of the FOMC meeting.
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