Payrolls-Led Bitcoin, Ether Price Swoon Is ‘Buy the Dip’ Opportunity, Crypto Trading Firm Says

As a researcher, I would interpret the post-report price drops in Bitcoin and Ethereum as an excellent buying chance based on QCP Capital’s perspective as a Singapore-based cryptocurrency trading firm.

The May jobs report for the U.S. revealed that the economy created 272,000 new non-farm jobs, significantly exceeding the anticipated 185,000 and surpassing April’s revised figure of 165,000. Despite the rise in unemployment to 4%, the average hourly wages increased by 0.4% compared to the previous month, contrary to expectations for a 0.3% increase.

The Fed rate cut probability in September dropped to 60% from 85%, causing markets to reconsider, leading to a decline in risk assets such as cryptocurrencies. JPMorgan and Citibank revised their forecasts for a rate cut in July, while some experts suggested the possibility of interest rate hikes or further liquidity reduction. Bitcoin, poised for a surge above $72,000, retreated nearly 3% to $68,400 as per CoinDesk figures, with Ether and the CoinDesk 20 index experiencing similar losses.

According to QCP Capital, it may be challenging for the Federal Reserve to maintain high interest rates when other central banks are lowering their borrowing costs.

“The unexpectedly large increase in new jobs (272K vs projected 182K) led to a higher unemployment rate (3.9% to 4.0%). This surprising development left investors perplexed and prompted a risk-averse stance prior to the release of U.S. inflation figures and the Federal Open Market Committee’s decision.”

“According to QCP Capital, this is an excellent moment to consider purchasing stocks on sale since the markets are likely to incorporate at least one interest rate reduction from the Fed going forward. Given that other countries are reducing their rates, it may prove challenging for the U.S. to resist following suit.”

Last week, both the European Central Bank and the Bank of Canada reduced their interest rates. As a result, the Group of Seven (G7) central banks are now engaged in what’s being called an “easing cycle.” This trend has been reflected in MacroMicro’s data, which shows an uptick in the number of central banks that have made rate reductions this year.

Central banks, such as the Federal Reserve, might follow suit and lower interest rates in response, creating a potential trend of rate reductions among major banks. Unintentionally, this could lead investors to seek out alternatives to traditional assets, like cryptocurrencies, due to the increased demand for high-yielding investments amidst mounting public debts.