Markets
Bitcoin Based on Salaries, Ether Price Swoon is an Opportunity to “Buy the Dip,” Says Crypto Trading Firm
-
The drop in BTC and ETH prices after the salary release is a good opportunity to buy the dip, QCP said.
-
The Fed will find it difficult to ignore interest rate cuts from the G7, the trading firm added.
Bitcoin {{BTC}} and Ether {{ETH}} have lost strength since warmer-than-expected U.S. jobs data dampened hopes for a rate cut. Federal Reserve interest in September.
According to QCP Capital, a trading company based in Singapore, the fall in prices of the two largest cryptocurrencies after the report provides a good opportunity for bargains.
Friday’s nonfarm payrolls data showed the U.S. economy added 272,000 jobs in May, well above the 185,000 estimated and well ahead of April’s downwardly revised 165,000. While the unemployment rate rose to 4%, average hourly wages, a key component of inflation, rose 0.4% month over month, above expectations for a rise by 0.3%.
Markets immediately reduced the likelihood of a 25 basis point Fed rate cut in September from 85% to 60%, sending risk assets including cryptocurrencies lower. JPMorgan and Citi abandoned forecasts for a Fed rate cut in July, while some observers put rate hikes or additional liquidity squeezes back on the agenda. Bitcoin, which appeared poised for a breakout above $72,000, fell nearly 3% to $68,400, according to CoinDesk data. Ether and the CoinDesk 20 Index followed Bitcoin’s lead.
QCP Capital said the Fed would struggle to keep rates high while other central banks cut borrowing costs.
“A strong surprise increase in the NFP (272,000 against 182,000), an increase in the wage bill was accompanied by an increase in unemployment (3.9% to 4.0%). It was sufficiently confusing to trigger risk aversion ahead of US inflation and FOMC numbers,” the company said in a statement. market update.
“We agree that this is a good opportunity to buy the dip as markets will increasingly price in at least one Fed rate cut from here on out. It will be difficult for the U.S. to ignore it while the rest of the world continues to cut rates.” QCP Capital said.
The European Central Bank and the Bank of Canada lower rates last week, leading the Group of Seven (G7) to begin what is known as an easing cycle. According to MacroMicro, the number of central banks whose most recent actions involved rate cuts has increased this year.
Other central banks, including the Fed, may soon join the battle. tit-for-tat rate reductions (often called currency wars) as part of a strategy to manage their growing public debts, inadvertently increasing demand for alternative investments like cryptocurrencies.
“Our desk has seen bullish flows during this decline, both from aggressive put sellers and call spread buyers, particularly in BTC,” QCP said.