Why Did Bitcoin Collapse Again?

The Impact of US Employment Data on the Crypto Market

The recent US employment data has sent shockwaves through the crypto market, leading to a steep decline in the prices of Bitcoin and most altcoins.

Data's Direct Impact

Released on Friday, the data revealed the creation of 272,000 jobs in May, far exceeding expectations of 185,000. While this suggests a robust economy, it also raised concerns about a potential delay in interest rate cuts by the Federal Reserve.

Crypto's Response

Bitcoin plunged 2.05% on Friday, falling below $70,000. Ethereum experienced a 3.56% drop, while Solana declined by 4.49%. Meme coins, such as PEPE, Floki, and WIF, suffered heavier losses.

Investor Reactions

Investors anticipated that strong job growth would discourage the Fed from cutting interest rates, triggering profit-taking in crypto markets. The rise in unemployment to 4% also contributed to this sentiment.

Importance of Interest Rates

Interest rate cuts are seen as a catalyst for bullish crypto markets, as they increase liquidity and reduce borrowing costs. However, the current economic strength and the possibility of a restrictive monetary policy have diminished these prospects.

Conclusion

The US employment data has injected uncertainty into the crypto market, leading to a significant drop in prices. Investors remain cautious, anticipating the Fed's decision on interest rates, which holds the key to potential gains in the future.