Markets
Bitcoin (BTC) and Ether (ETH) Price Drop Following US Jobs Report Is an Opportunity to ‘Buy on the Dip,’ Says QCP Capital
Bitcoin (BTC) and ether (ETH) have lost momentum since stronger-than-expected U.S. jobs data released on Friday dampened hopes of an interest rate cut by the Federal Reserve in September.
According to QCP Capital, a Singapore-based trading firm, the post-report price collapse in the two largest cryptocurrencies offers a good opportunity for business.
Nonfarm employment data on Friday showed the U.S. economy created 272,000 jobs in May, far more than the 185,000 estimated and far more than the downwardly revised 165,000 in April. While the unemployment rate rose to 4%, average hourly wages, the sticky component of inflation, rose 0.4% month over month, above expectations for a 0.3% increase.
Markets immediately reduced the likelihood of a 25 basis point Fed rate cut in September to 60% from 85%, sending risky assets including cryptocurrencies tumbling. JP Morgan and Citi forecasts discarded for a Fed rate cut in July, while some observers put rate increases or further liquidity restrictions back on the agenda. According to CoinDesk data, Bitcoin, which appeared poised for a breakout above $72,000, fell nearly 3% to $68,400. Ether and the CoinDesk 20 Index followed Bitcoin’s lead.
QCP Capital said the Fed will struggle to keep rates high as other central banks reduce borrowing costs.
“The sharp rise surprised the NFP (272,000 vs. 182,000), the increase in wages is accompanied by an increase in unemployment (from 3.9% to 4.0%). It was confusing enough to trigger risk aversion ahead of US inflation data and the FOMC,” the company said in a statement. market update.
“We agree that this is a good opportunity to buy on the dip as markets will increasingly price in at least a Fed rate cut from here. It will be difficult for the US to ignore this as the rest of the world continues to cut rates.” He said QCP Capital.
The European Central Bank and the Bank of Canada cut rates last week, leading the Group of Seven (G7) to initiate a so-called easing cycle. According to MacroMicro, the number of central banks whose most recent measures were rate cuts increased this year.
Other central banks, including the Fed, may soon join the fray “tit-for-tat” tariff reductions. (often called currency wars) as part of a strategy to manage their growing government debts, inadvertently increasing demand for alternative investments such as cryptocurrencies.
“Our desk has seen bullish flows on this dip, both aggressive put sellers and call spread buyers, especially in BTC,” QCP said.