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Why is the price of Bitcoin falling today?
The cryptocurrency market suffered a significant downturn today Bitcoin falling below the $71,000 support level at $68,500, while Ethereum falls to $3,600. The global cryptocurrency market capitalization decreased by 2.60% to $2.55 trillion, while the total market volume increased by 42.17% to $106.43 billion. Meanwhile, many are wondering what is the main reason behind the sudden drop in the market.
Reasons behind the market decline
The recent release of the US Employment Summary Report played a significant role in this recession. The summary report on the employment situation in the United States revealed that 272,000 Jobs were added in May, exceeding expectations.
However, the unemployment rate also increased slightly from 3.9% to 4.0%, presenting mixed signals about the health of the economy.
Although the data shows a different trend, Markus Thielen, head of research at 10x Research, believes that the jobs report is not the main reason for the cryptocurrency market’s decline. However, the cryptocurrency sold off late on Friday without any obvious reason for the rally price of bitcoin fall.
Increase in non-farm payrolls (NFP)
Beyond that, rising nonfarm payrolls indicate a robust job market, which could push higher interest rates from the Federal Reserve. Higher interest rates typically lead to a stronger dollar, reducing the attractiveness of riskier assets like cryptocurrencies.
Stronger dollar, weaker cryptocurrencies
Adding to the complexity, the US Dollar Index (DXY) has strengthened, meaning the dollar is gaining value against other currencies. A stronger dollar often leads investors to abandon riskier assets such as cryptocurrencies like Bitcoin, causing their value to decline.
The combination of a strong dollar and potential interest rate increases has led to bearish sentiment in cryptocurrencies market. Investors are retreating from riskier assets, leading to the market’s recent decline.
What is the future of cryptocurrencies?
Looking ahead, analysts had predicted that a weaker jobs report could lead to lower interest rates, potentially pushing Bitcoin to new highs. Markus Thielen said that if the next consumer price index (CPI) report shows inflation at 3.3% or lower, Bitcoin could reach new all-time highs.
As the market reacts to these economic signals, it is crucial to keep an eye on future central bank announcements and economic reports for further clues about the direction of the market.
Read also: Lark Davis Predicts Massive Crypto Bull Run on Horizon – Here’s Why