What is causing the drop in cryptocurrency prices today Bitcoin and Ethereum face uncertainty in light of economic data and central bank decisions
The cryptocurrency market is currently experiencing a decline, with both Bitcoin and Ethereum trading below $68,000 and $3,600, respectively. Investors are eagerly awaiting significant economic data and the outcome of the upcoming FOMC meeting on June 12. Despite the market downturn, institutions and companies are still seeking exposure to crypto this year.
The CPI inflation and core CPI are estimated at 3.4% and 3.5%, respectively, and investors are closely watching the Fed’s interest rate decision. QCP Capital suggests that the recent price drop following the U.S. employment report presents a favorable buying opportunity.
The cryptocurrency market has begun the week on a bearish note, with major coins like Bitcoin and Ethereum experiencing substantial price drops. This downturn comes as investors anxiously await the release of crucial economic data and the outcome of the upcoming Federal Open Market Committee (FOMC) meeting, 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 is due to the uncertainty surrounding the 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 the recent inflows into Bitcoin spot ETFs, which saw 19 consecutive days of net inflows before experiencing a single-day outflow of $64.9318 million on June 10.
The crypto market’s performance this week will likely be influenced by the release of the Consumer Price Index (CPI) report and the outcome of the FOMC meeting. The CPI inflation is estimated at 3.4%, while core CPI is expected to be 3.5%. Investors are also closely monitoring the Fed’s interest rate decision, with the CME FedWatch Tool indicating a high market expectation for the Fed to maintain rates between 525 and 550 basis points.
Crypto analyst Markus Thielen from 10x Research provides insight into the potential market reaction based on the CPI data. If the CPI prints at 3.3% or lower, Thielen suggests that Bitcoin could attempt to break out. However, if the CPI prints at 3.5% or higher, he believes that Bitcoin will likely correct over the next few weeks, although this is not his base case. Despite the potential correction, Thielen maintains an upside bias for higher Bitcoin prices.
The recent U.S. jobs data, which exceeded expectations, has dampened hopes for a Federal Reserve rate cut in September. However, Singapore-based trading firm QCP Capital believes that this price drop following the U.S. employment report provides 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 Bank of Canada have already cut rates last week, marking the beginning of a cycle of monetary easing by the Group of Seven (G7) nations.
QCP Capital suggests that other central banks, including the Federal Reserve, may soon join the fray by cutting rates, leading to increased market liquidity and boosting demand for alternative investments like cryptocurrencies.
