Investing.com – and have come under heavy pressure since Friday's U.S. employment data was released, which beat expectations and dashed hopes of a Federal Reserve interest rate cut in September.
Meanwhile, this price drop following the US jobs report offers a good buying opportunity, according to Singapore-based trading firm QCP Capital.
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Nonfarm payrolls data on Friday showed the U.S. economy added 272,000 jobs in May, significantly higher than the estimated 182,000 jobs, and much more than the downwardly revised reading of 165,000 jobs in April. While the unemployment rate rose to 4%, the average hourly wage rose 0.4% month-on-month, above expectations of 0.3%.
Markets immediately reduced the probability of a 25 basis point Federal Reserve interest 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, and some analysts put rate hikes or tighter liquidity restrictions back on the agenda. Bitcoin, which seemed poised to break the $72,000 barrier, fell almost 3% to $68,400. Ethereum followed Bitcoin's lead.
Greater market liquidity and cryptocurrency rebound
QCP Capital said the Federal Reserve would struggle to keep interest rates high while other central banks are reducing borrowing costs.
The report said: “The non-farm payrolls report surprised us as it was confusing enough to spur risk aversion ahead of US inflation numbers and this week's Federal Reserve meeting.”
“We agree that this is a good buying opportunity, as markets will increasingly value at least a rate cut from the Federal Reserve. It will be difficult for the US to ignore this while the rest of the world continues to cut rates. interest rates”.
The European Central Bank and the Bank of Canada cut interest rates last week as the Group of Seven (G7) began a monetary easing cycle.
Other central banks, including the Federal Reserve, may soon join the fray by cutting interest rates, leading to greater market liquidity, inadvertently increasing demand for alternative investments like cryptocurrencies.
