US Jobs Data Shakes Crypto Market, Bitcoin & Ether Take a Hit
Summary:
The crypto market is reeling from a decline of 1.33% on June 7, taking its total value down to $2.6 trillion. The blow is attributed to stronger than expected US employment data hinting at a delay in decreasing interest rates, vital for increasing market liquidity. Respective falls of 2.7% and 4.1% were also recorded for Bitcoin and Ether, the market's two largest cryptocurrencies. The situation is further exacerbated by the liquidation of long versus short positions in the crypto derivative market. As a result, the market is currently dominated by sellers, suggesting a potential further decrease in the total market value.
The digital currency market has suffered a blow today, with the overall market value taking a plunge of 1.33% to come down to $2.6 trillion on June 7. The collapse was best outlined in the TOTAL digital currency market analysis from TradingView. The most valuable crypto, Bitcoin (BTC), fell by 2.7% to hover around $69,156. At the same time, Ether (ETH), the second most valuable, slipped 4.1% to trade in the ballpark of $3,675 at the news hour.
Markets are reacting to strong U.S. jobs data which surpasses expectations indicating that tighter fiscal policy is not affecting the job market as much as anticipated. With the U.S. Labor Department announcing the creation of 272,000 new jobs in May, surprising previous estimates which stood at 185,000; this is notably more than the 165,000 jobs added in April. Consequently, the unemployment rate rose to 4.0% in May 2022, the first since January, compared to the anticipated 3.9% and April's rate of 3.9%.
This latest job market update may delay the Federal Reserve's interest rate cuts - a vital trigger for extra market liquidity affecting high-risk assets, including cryptocurrencies. The Federal Open Market Committee (FOMC) meeting scheduled for June 12 is expected to see little chance for cuts in their subsequent two meetings. The CME FedWatch tool reveals traders predicting the chances of a June 12 rate cut at a mere 0.6%, and July 31 at a low 8.88% versus September's 46% and November's 47.4%.
This has cast a negative shadow on high-risk assets such as cryptocurrencies, emerging market stocks, bonds and even commodities. Bloomberg’s Chief Economist, Anna Wong, stated that the uptick in the unemployment rate gives a more accurate portrayal of the current job market. According to her, the Bureau of Labor Statistics’ model for estimating jobs from newly formed and closed businesses, which added 231,000 jobs to the nonfarm payrolls print in May, is falling behind real-time data of rising company closures.
The overall downturn experienced in the crypto market today is further aggravated by the liquidation of longer versus shorter-term positions. The crypto derivative market alone has seen over $387.83 million in liquidations, with long positions making up $348 million and more than $249 million being liquidated in the past hour.
Over the last day, more than 133,576 traders have faced liquidation, the largest recorded on OKX's crypto exchange involving an ETH/USD swap worth $5.20 million. Liquidation of long positions typically implies the selling of the asset either voluntarily or through a broker, further exacerbating the drop in price.
The total market capital showed a bearish divergence with its Relative Strength Index (RSI) revealing a negative trend before today's decrease. The RSI, a trend-following momentum indicator that signals if a market is overbought or oversold, reveals a bearish divergence when the price rise is met with a decrease in momentum, resulting in a downward direction. This indicates the market is currently dominated by sellers who may continue to draw the TOTAL market value towards the 100-day simple moving average (EMA) at $2.402 in the near future.
This news is not investment advice or recommendations. All investments and trading decisions come with risks, and readers are advised to conduct their own research before making decisions.
Published At
6/7/2024 10:08:34 PM
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