Cryptocurrency Prices Dip Despite Positive
Cryptocurrency Prices Dip Despite Positive U.S. Jobs Data
In the world of cryptocurrencies, price fluctuations are a daily occurrence. On Saturday, September 2, 2023, major cryptocurrencies saw a dip in their values, despite some positive developments in the U.S. job market. In this article, we will delve into the recent cryptocurrency market trends, the impact of U.S. job data, and the factors contributing to this market volatility.
Bitcoin's Slide and Ethereum's Correction
At 14:20 WIB (Western Indonesian Time), according to data from CoinMarketCap, Bitcoin showed a decline of 0.81%, reaching $25,785.13 per coin or approximately Rp 392,836,456 per coin (based on an exchange rate assumption of Rp 15,235/US$). Similarly, Ethereum saw a correction of 0.85%, settling at $1,630.92 per coin (Rp 24,847,066 per coin). While Bitcoin and Ethereum faced downward pressure, Binance Coin (BNB) and Dogecoin managed to gain 0.13% each.
Cryptocurrency Market Volatility Amidst SEC Actions
Just days prior, the cryptocurrency market had seen a significant surge in prices following Grayscale's victory over the U.S. Securities and Exchange Commission (SEC) in its bid for a Bitcoin spot exchange-traded fund (ETF). However, all those gains have now been relinquished as the market returns to pre-court decision levels. The majority of cryptocurrencies experienced a downturn within the last 24 hours after the SEC postponed decisions on six ETF applications, including those from BlackRock and Fidelity.
Mixed Signals in the U.S. Labor Market
Cryptocurrency prices also experienced turbulence amidst mixed signals in the U.S. labor market. On a surprising note, the U.S. unemployment rate surged to 3.8% in August, well above market expectations of 3.5% and the previous month's rate of 3.5%. However, non-farm payroll (NFP) job creation soared to 187,000 in August, surpassing both July's 157,000 and market expectations (170,000). Earlier, ADP payroll data indicated that private employers added 177,000 jobs in August, significantly below the revised figure for July of 371,000 and missing Dow Jones' estimate of 200,000. Concurrently, the number of U.S. citizens filing unemployment claims decreased to 228,000 for the week ending on August 26, 2023, down from 232,000 the previous week. The ongoing variability in labor data has kept uncertainty high.
Economic Growth and Inflation Concerns
Despite the labor market fluctuations, there are indicators of a slowing U.S. economy. The growth projection for Q2-2023 was revised down to 2.1% year-on-year (YoY), compared to the earlier estimate of 2.4%. Conversely, the Personal Consumer Expenditure (PCE) inflation report saw an increase to 3.3% YoY in July 2023, up from 3% in June. This uptick in PCE raises concerns as it suggests that inflation in the U.S. may continue to run high, potentially making it challenging for the U.S. Federal Reserve (The Fed) to implement accommodative measures.
The Fed's Expected Policy
Amidst the economic data fluctuations, the market anticipates that The Fed will likely maintain its benchmark interest rates during the September 19-20 meeting. CME Fedwatch indicates that 93% of investors believe The Fed will hold its benchmark rates at 5.25%-5.5%, with only 7% expecting a 25 basis point (bp) rate hike.
Bitcoin's Gradual Sell-Off and Market Sentiment
A gradual sell-off of Bitcoin may be on the horizon over the next one to two months, pending final ETF approvals. "Once the final [ETF] approvals are in place, this will be very bullish for BTC and all digital assets. However, until that time comes, market fundamentals impacting all risk assets and technicals will be the primary drivers in the short term," explains John Glover, Chief Investment Officer at crypto lender Ledn.
QCP Capitals' Bitcoin Price Forecast
Adding to the uncertainty, crypto trading firm QCP Capitals predicts that Bitcoin's price could drop to $23,000 to $24,000 in September. They cite fading optimism around ETFs due to increasing SEC scrutiny and the comparative lack of innovation in the crypto sector compared to other technology sectors.
The September Effect
Furthermore, the month of September historically holds a dubious reputation as the worst-performing month of the year for nearly all risk assets. This phenomenon is commonly referred to as the 'September Effect.'
As we navigate the turbulent waters of the cryptocurrency market, it's crucial to keep an eye on various factors, including economic data, regulatory decisions, and market sentiment. While cryptocurrencies have shown resilience in the face of adversity, they remain highly sensitive to external influences, making it imperative for investors to stay informed and vigilant. The coming months will undoubtedly bring further twists and turns to this ever-evolving landscape.