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Why are cryptocurrencies falling today? Uncertainty about BTC and ETH between economic data and central bank decisions
TLDR
- The cryptocurrency market is experiencing a downturn, with Bitcoin and Ethereum trading below $68,000 and $3,600 respectively.
- Investors await crucial economic data and the outcome of the next FOMC meeting on June 12.
- Despite the market downturn, institutions and companies are seeking exposure to cryptocurrencies this year.
- Core CPI and CPI inflation are estimated at 3.4% and 3.5%, respectively, and investors are closely monitoring the Fed’s interest rate decision.
- QCP Capital suggests that the current price decline following the US jobs report offers a good buying opportunity.
The cryptocurrency market started the week on a bearish note, with major coins such as Bitcoin and Ethereum recording significant price drops.
This decline comes as investors anxiously await the release of crucial economic data and the outcome of the next meeting of the Federal Open Market Committee (FOMC), both scheduled for Wednesday, June 12.
Bitcoin, the world’s largest cryptocurrency by market capitalization, has fallen below the $68,000 level, while Ethereum, the second largest, is trading below $3,600.
The bearish sentiment in the market can be attributed to the uncertainty surrounding upcoming events and their potential impact on the global economy.
Despite the current market downturn, institutional interest in cryptocurrencies remains strong. This sentiment is echoed by recent inflows into Bitcoin spot ETFs, which recorded 19 consecutive days of net inflows before recording a single-day outflow of $64.9318 million on June 10.
The performance of the cryptocurrency market this week will likely be influenced by the release of the Consumer Price Index (CPI) report and the outcome of the FOMC meeting.
CPI inflation is estimated at 3.4%, while core CPI is expected to be at 3.5%. Investors are also closely monitoring the Fed’s interest rate decision, with the CME’s FedWatch tool indicating high market expectation for the Fed to keep rates between 525 and 550 basis points.
Markus Thielen, crypto analyst at 10x Research provides information on potential market reaction based on CPI data. If CPI stands at 3.3% or lower, Thielen suggests Bitcoin could try to break out.
However, if the consumer price index stands at 3.5% or higher, he believes Bitcoin will likely correct in the coming weeks, although this is not his base case scenario. Despite the potential correction, Thielen maintains a bullish bias for higher Bitcoin prices.
Recent US employment data, which beat expectations, dampened hopes of a rate cut by the Federal Reserve in September.
However, Singapore-based trading firm QCP Capital believes this drop in prices following the US jobs report offers a good buying opportunity. They argue that the Federal Reserve would struggle to keep interest rates high while other central banks are cutting borrowing costs.
The European Central Bank AND The Bank of Canada already cut rates last weekwhich marks the start of a cycle of monetary easing by the Group of Seven (G7) countries.
QCP Capital suggests that other central banks, including the Federal Reserve, may soon join the fray by cutting rates, leading to greater market liquidity and increasing demand for alternative investments such as cryptocurrencies.