Bitcoin’s price fell below US$70,000 on Friday, influenced by a combination of factors: a mixed U.S. jobs report and a rate cut by the European Central Bank (ECB).
Mixed U.S. Jobs Report
The U.S. Bureau of Labor Statistics released a report showing a complex economic picture.
Key points from the report include:
Job Creation: There was an increase in job creation, indicating some strength in the labor market.
Unemployment Rate: Despite the rise in job creation, the unemployment rate also increased to 4%. This dual trend can signal that while more jobs are being created, not all job seekers are finding employment.
Weekly Hours Worked: The consistency in the number of weekly hours worked without significant increase hints at potential underlying economic issues, such as businesses being cautious about extending hours or hiring more staff.
Economic Indicators
Average Hourly Earnings: There was a 0.4% rise in average hourly earnings in May, which marks a 4.1% increase over the past year. This indicates wage growth, which is typically a positive sign.
Aggregate Weekly Payroll Growth: Despite the increase in hourly earnings, the pace of growth in aggregate weekly payrolls in the private sector slowed compared to the previous year. This deceleration could imply that overall economic growth is losing momentum.
ECB Rate Cut
The ECB’s decision to cut rates adds to the economic complexity. A rate cut is typically aimed at stimulating economic activity by making borrowing cheaper. However, it also signals concerns about economic slowdown or instability in the European economy.
Impact on Bitcoin
Bitcoin, like other financial assets, is sensitive to broader economic conditions and market sentiment. The combination of mixed signals from the U.S. jobs report and actions by the ECB created uncertainty in the markets, leading to a decline in Bitcoin’s value. Investors might interpret these indicators as signs of economic instability, prompting them to move away from riskier assets like Bitcoin.
Bitcoin traded at $69,318 at 6:00 p.m. ET, according to CoinGecko.
The ECB’s decision to lower its benchmark lending rate from 4% to 3.75%, marking the first reduction in five years, is anticipated to potentially increase liquidity and enhance the attractiveness of alternative assets like Bitcoin.
Additionally, positive institutional inflows into US spot Bitcoin ETFs, which saw over $1.54 billion in net inflows this week, could influence Bitcoin’s short-term trajectory.
Meanwhile, Bitcoin bulls might be puzzled about what it takes for a true upside breakout. The spot ETFs have recorded their 18th consecutive day of inflows as of Thursday, surpassing the streaks seen during the price surges of February and March. During this period, ETFs accumulated over 56,000 Bitcoins, nearly seven times the amount mined, according to HODL Capital.
This intricate interplay of economic indicators, central bank policies, and market dynamics continues to influence Bitcoin’s price trajectory, leaving investors speculating on its future direction.
Summary :
Bitcoin experienced a significant decline late Friday, falling below US$70,000 due to a mixed U.S. jobs report and a rate cut by the European Central Bank (ECB). Initially challenging $72,000 earlier in the day, Bitcoin’s price retreated during U.S. trading hours, eventually settling at $69,300 according to CoinGecko, marking a 2.5% drop within 24 hours.
The U.S. Bureau of Labor Statistics report revealed a complex economic scenario: an unexpected increase in job creation with 272,000 jobs added in May, coupled with a rise in the unemployment rate to 4%. This dashed hopes for an imminent interest rate cut by the Federal Reserve, causing interest rates and the dollar to rise sharply.
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