Bitcoin and other cryptocurrencies experienced a downward trend on Friday, following the downward movement of stocks. This decline came as expectations of interest-rate hikes from the Federal Reserve grew. Despite a favorable U.S. jobs report, the overall narrative remained unchanged.
Over the past 24 hours, the price of Bitcoin has dropped by 1% to reach $30,250. While this represents a slight recovery from the $30,100 mark, it still remains susceptible to sliding below the psychologically crucial level of $30,000. Notably, Bitcoin had recently surpassed this important milestone after BlackRock and other entities expressed their interest in spot Bitcoin exchange-traded funds. This influx of attention from retail and institutional investors had sparked hope for the future of crypto. However, broader macroeconomic influences are now coming into play and affecting the market.
Yuya Hasegawa, an analyst at crypto exchange Bitbank, commented on the situation: “The impact of spot Bitcoin ETF filings on the price seems to be diminishing, while robust U.S. economic data has led to an increase in Treasury yields, thereby exerting downward pressure on Bitcoin’s price.”
Similar to the Dow Jones Industrial Average and S&P 500, Bitcoin was expected to be influenced by the U.S. jobs report on Friday. This report serves as a crucial indicator of the state of the economy. Given the current battle against high inflation through higher interest rates, the Federal Reserve closely monitors employment data. It’s worth noting that rising interest rates posed a significant challenge for cryptocurrencies last year. However, with optimism in 2023 that the worst is behind us, Bitcoin achieved its best first half since 2019.
Overall, the decline in Bitcoin and other cryptocurrency prices can be attributed to mounting concerns over potential interest-rate hikes by the Federal Reserve. The market continues to be influenced by both internal factors, such as the impact of spot Bitcoin ETF filings, and external factors like macroeconomic forces and U.S. economic data. As investors and analysts closely monitor these developments, the future trajectory of cryptocurrencies remains uncertain.
Resilient Jobs Data Reignites Rate Hike Fears
The release of the ADP employment report this week has sparked concerns about the Federal Reserve’s potential rate hikes. Despite pausing in June, the central bank may continue to raise rates, leading markets to brace for an increase this month and possibly another in September. This news sent stocks spiraling downward on Thursday, with Bitcoin also feeling the impact.
Even if the upcoming jobs report indicates a slight cooling in the U.S. labor market, experts predict that Bitcoin will struggle to break out of its current range. Hasegawa shared this sentiment before the jobs report was released.
In line with expectations, the U.S. economy added 209,000 jobs in June. While this surpassed some forecasts, it fell short of the previous month’s gain of 339,000 jobs. However, these signs of slowing did little to ease fears of an imminent rate hike. Stocks opened lower, and markets are still pricing in a high probability of a July increase in rates. As a result, Bitcoin remains rangebound.
In addition to Bitcoin, Ether, the second-largest cryptocurrency, experienced a 2% decline, reaching $1,870. Altcoins such as Cardano and Polygon also demonstrated weakness, sliding 1%. The trend continued among memecoins, with Dogecoin down 1% and Shiba Inu shedding 2%.
Originally written by Jack Denton.
