Bitcoin plummeted below $86,000 following the release of delayed U.S. employment data showcasing persistent inflationary pressures. The cryptocurrency’s price plunged 7.3% in the past 24 hours, hitting a seven-month low of $85,700. Investors are generally inclined to believe that the anticipated interest rate cut in December alone will not suffice for a sustainable market recovery.
Macroeconomic Pressures Intensify Bitcoin’s Decline
The U.S. non-farm employment data for September revealed the addition of 119,000 new jobs, significantly surpassing the forecast of 50,000. This robust employment figure indicated that inflationary pressures remain unresolved, overshadowing the Federal Reserve’s plans to relax monetary policy. After the data release, CME Group’s FedWatch tool priced in only a 35.4% probability of a 25 basis point rate cut in December.
Vincent Liu, CIO of Kronos Research, remarked, “The employment data exceeding expectations diminished hopes for a December rate cut. Low liquidity and short-term profit-taking have amplified price movements.” Liu emphasized that a sustainable recovery would necessitate fresh capital inflows and increased on-chain demand, as a rate cut alone is insufficient.
The Crypto Fear and Greed Index, known as a fear gauge in the crypto market, remains at 11, indicating “extreme fear.” Market-wide declines in the last 24 hours reached 6.6%, revealing investors’ heightened risk aversion amidst macroeconomic uncertainties.
Experts View the Decline as a Healthy Correction
Nick Ruck, Director of LVRG Research, described the current price drop as a healthy resolution of overpositioning. Ruck noted that on-chain data showed stabilization of selling pressure in both spot and futures markets, indicating the capitulation phase is nearing its end.
Liu highlighted that for a sustainable price turnaround, the Federal Reserve merely halting its tightening isn’t adequate. For the market to regain strength, he argued, four elements are crucial: the Fed stopping balance sheet reductions, new capital influx, increased on-chain demand, and positive investor sentiment occurring concurrently.
Bitcoin’s value has decreased by 32% since reaching an October peak of $126,000. Analysts point out that cryptocurrencies have become more sensitive to macro data than ever, making upcoming U.S. economic data crucial in determining market direction in the weeks ahead.