The cryptocurrency market took a hit on June 7, with the total market capitalization dropping by 1.33% to $2.6 trillion. Bitcoin (BTC) fell by 2.7% to around $69,156, while Ether (ETH) dropped by 4.1% to trade around $3,675. Investors shifted to a risk-off mode in response to stronger than expected U.S. job data, suggesting that the labor market was handling tight fiscal policies better than anticipated.
The U.S. Labor Department reported the addition of 272,000 jobs in May, exceeding estimates of 185,000 and higher than April’s 165,000. The unemployment rate also grew to 4.0%, versus estimates of 3.9% and April’s 3.9%. This data has reduced the likelihood of the Federal Reserve lowering interest rates, impacting risk assets like cryptocurrencies. The Federal Open Market Committee (FOMC) meeting on June 12 is not expected to result in a rate cut, with traders placing low odds on such an outcome.
Bloomberg Chief Economist Anna Wong pointed out that the rise in the unemployment rate is a better indicator of the employment situation, as business closures and falling formations affect the job gains. Over $380 million in liquidations have occurred in the crypto market, with more than 133,576 traders being liquidated in the last 24 hours. The derivatives market witnessed liquidations worth $387.83 million, mostly affecting long positions.
The TOTAL market capitalization has been on the rise since May 1, with a bearish divergence in the Relative Strength Index (RSI) suggesting a potential market downturn. A bearish divergence in the RSI occurs when an increase in price is accompanied by a decrease in momentum, indicating downward movements. The market could be controlled by bears aiming to bring the TOTAL market value towards the 100-day simple moving average (EMA) at $2.402 in the short term.
In conclusion, the crypto market is facing challenges due to the unexpected U.S. job data and the reduced likelihood of a rate cut by the Federal Reserve. Traders are cautious about investing in risk assets as cryptocurrencies experience a downturn. The liquidation of long positions and the bearish RSI divergence indicate a potential market correction in the near future, highlighting the need for investors to conduct thorough research before making any investment decisions. Remember, this article does not offer investment advice and readers should exercise caution when trading in volatile markets like cryptocurrencies.
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