Bitcoin Dips Amid Unanticipated U.S. Payroll Data and Reduced Rate Cut Prospects
Summary:
The Bitcoin (BTC) value experienced a quick dip on June 7, following the release of better-than-expected U.S. payroll data, reducing the likelihood of Federal Reserve rate cuts. Markets suggested little chance of rate cuts in the next three Federal Open Market Committee meetings. The news led Bitcoin to decrease by $1,300 within a single hour before rebounding. Market participants awaited volatility resolution, with BTC/USD still below main resistance. Despite higher unemployment rates (4%), robust payroll growth indicates resilience in the labor market. The information here does not offer financial advice or recommendations, and any investment or trading action involves risks.
Flash dips in Bitcoin (BTC) value marked the Wall Street opening on June 7, as the latest U.S. payroll data caught markets off guard. BTC/USD's rates demonstrated a precipitous $1,300 decline within a single hour before reclaiming some lost ground.
The sharply mixed U.S. employment data triggered a quick response in Bitcoin value. The data exceeded expectations, hinting that the workforce could weather restrictive fiscal policies better than projected. This development helped push back the likelihood of the Federal Reserve dropping interest rates, a vital condition for injecting liquidity into risk assets and cryptocurrency. Economist Mohamed El-Erian commented that this minimizes chances of a rate cut in July as reported by Bloomberg.
The Federal Open Market Committee (FOMC) assembly scheduled on June 12 for rate deliberations could likely see small chances for a cut in the next three meetings, according to market watchers. Estimates from CME Group’s FedWatch Tool indicate probabilities for a modest 0.25% reduction at 0.6%, 8.8%, and 50.8% for the FOMC gatherings in June, July, and September respectively.
However, observers noted the peculiar juxtaposition of solid payrolls and increased unemployment, having risen to 4% and exceeding predicted levels by 0.1%. "The US labor market appears totally schizophrenic," according to commentator Holger Zschaepitz's statement on X (formerly Twitter).
Highlighting the focus on the BTC pricing changes, market players stepped back to let volatility find its equilibrium. Noted trader Daan Crypto Trades mentioned that BTC/USD stayed below significant resistance whereas Skew, another trader, mentioned the need for spot bidders to propel an upward trend.
Thickening liquidity was observed both above and below the spot price as documented by market monitoring source CoinGlass, with resistance now being at $72,600 compared to the initial $71,900 of the day. Daan Crypto Trades summed up by saying, “BTC still hovers between the two main support and resistance levels at $67K and $72K. A sustained consolidation below this resistance increases the probability of a break in my view. We wait and watch.”
The accompanying graph showed the recent higher and lower fluctuations for BTC/USD, suggesting the generally sideways trading scenario. This report doesn't provide any financial advice or recommendations. Every investment and trading decision carries risk, and readers are advised to perform their own analysis prior to making such decisions.
Published At
6/7/2024 5:29:16 PM
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