Bitcoin (BTC) and ether (ETH) saw a price drop following the release of the U.S. jobs data, which showed stronger than expected job growth in May. This caused investors to reassess the likelihood of a Federal Reserve interest-rate cut in September, leading to a decrease in the probability of a rate cut from 85% to 60%. As a result, risk assets, including cryptocurrencies, experienced a decline in value. Bitcoin fell almost 3% to $68,400, while ether and the CoinDesk 20 index also followed suit.
Despite the price drop, QCP Capital, a Singapore-based trading firm, sees this as a good opportunity to buy the dip in BTC and ETH. The firm believes that the markets will start pricing in at least one Fed rate cut going forward, and that it will be difficult for the U.S. to ignore cutting rates as other central banks around the world, including the European Central Bank and the Bank of Canada, have already started cutting rates. This global trend towards easing monetary policy could lead to a currency war, as central banks try to manage their mounting public debts, which could benefit alternative investments like cryptocurrencies.
QCP Capital noted that there was a bullish sentiment following the price drop, with aggressive put sellers and call spread buyers showing interest in BTC. The firm believes that the Fed will struggle to maintain higher rates while other central banks are reducing borrowing costs, and that the U.S. may eventually have to join the rate-cutting trend. This could further increase the demand for cryptocurrencies as investors seek alternative assets in a low interest-rate environment.
The jobless rate in the U.S. rose slightly to 4% in May, despite the strong job growth, and average hourly earnings increased by 0.4% month-on-month, surpassing expectations of a 0.3% rise. This mix of positive and negative economic data led to a risk-off sentiment in the market, as investors awaited U.S. inflation numbers and the Federal Open Market Committee (FOMC) meeting. The uncertainty surrounding future Fed rate cuts contributed to the decline in cryptocurrency prices, providing an opportunity for savvy investors to enter the market at a lower price point.
Overall, QCP Capital believes that the post-payrolls report price drop in BTC and ETH is a good chance to buy the dip, as the markets are likely to price in a Fed rate cut going forward. With other central banks around the world already cutting rates, there is a growing expectation that the U.S. will also have to follow suit. This could lead to increased demand for alternative investments like cryptocurrencies, making now a potentially lucrative time to invest in BTC and ETH. Investors should keep an eye on Federal Reserve announcements and global economic trends to stay ahead of market movements and capitalize on potential opportunities in the cryptocurrency space.
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