Why Did Bitcoin Collapse Again?

Sat 08 Jun 2024 ▪
min of reading ▪ by
Luc Jose A.

The latest employment data in the United States has shaken the crypto market, causing a sudden and significant drop in the prices of bitcoin and most altcoins. This news, which surprised many investors, calls into question the hopes for an imminent interest rate cut by the Federal Reserve.

Le Bitcoin en chute

The direct impact of employment data

The publication yesterday of employment data in the United States triggered a sharp drop in the prices of major cryptos. After a slight decrease of 0.48% on Thursday, the price of Bitcoin fell by 2.05% on Friday, reaching 69,326 dollars, down from 70,771 dollars the day before. This marked decline reflects growing uncertainty and the market’s quick reaction to economic news.

Ethereum, the other major crypto, was also heavily impacted, with a 3.56% decrease. Solana was not spared, registering a 4.49% drop. The meme coins, which had recently seen good performance, suffered even greater losses. PEPE fell by 10.49%, Floki by 11.87%, and WIF by 11.58%. In short, the entire crypto market was affected by this economic news.

Furthermore, the market downturn led to massive liquidations of long positions, totaling 360 million dollars.

Reactions of Bitcoin investors

The employment data published by the United States Department of Labor revealed the creation of 272,000 jobs in May, far exceeding the 185,000 expected and the 165,000 of the previous month. This significant increase in the number of jobs was accompanied by a rise in the unemployment rate to 4%, a level last reached in January 2022.

Faced with these figures, investors quickly reacted by anticipating that the Federal Reserve would not reduce interest rates in the near future. This prospect triggered rapid profit-taking on bitcoin and other cryptos. Indeed, the data indicates that the economy remains robust despite the increase in unemployment, limiting the chances of a rate cut by the Fed at the next Federal Open Market Committee (FOMC) meeting scheduled for June 12.

The interest rate cut is perceived by bitcoin investors as a potential catalyst for a bullish market, as it could increase demand and liquidity by reducing borrowing costs. However, the recent employment numbers show an economy strong enough to justify maintaining current rates, or even a more restrictive monetary policy, which has contributed to the decline in crypto prices.

Maximize your Cointribune experience with our ‘Read to Earn’ program! Earn points for each article you read and gain access to exclusive rewards. Sign up now and start accruing benefits.

Click here to join ‘Read to Earn’ and turn your passion for crypto into rewards!

Luc Jose A. avatarLuc Jose A. avatar

Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.


The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

Source link