June 11 2024: Bitcoin and Ethereum have been under significant pressure since Friday’s U.S. jobs data, which surpassed expectations and diminished hopes for a Federal Reserve rate cut in September.
However, Singapore-based trading firm QCP Capital suggests that the recent price drop, following the U.S. employment report, presents a good buying opportunity.
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Friday’s non-farm payroll data revealed that the U.S. economy added 272,000 jobs in May, significantly higher than the estimated 182,000 and much more than the revised April figure of 165,000. While the unemployment rate rose to 4%, average hourly earnings increased by 0.4% month-on-month, surpassing expectations of 0.3%.
As a result, markets immediately reduced the likelihood of a 25-basis point Federal Reserve rate cut in September from 85% to 60%, 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 now considering potential rate hikes or further liquidity tightening. Bitcoin, which seemed poised to break the $72,000 barrier, fell by almost 3% to $68,400. Ethereum mirrored Bitcoin’s decline.
Increased Market Liquidity and Crypto Rebound
QCP Capital noted that the Federal Reserve might struggle to maintain high interest rates while other central banks are lowering borrowing costs. The report stated, “The non-farm payroll report was surprising and confusing enough to trigger 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, initiating a cycle of monetary easing within the Group of Seven (G7). Other central banks, including the Federal Reserve, may soon follow, leading to increased market liquidity, which could inadvertently boost demand for alternative investments like cryptocurrencies.
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