It was a sea of red in the crypto industry on Friday after Bitcoin price dropped below the crucial support of $55,000.
Most altcoins like Ethena (ENA), Solana (SOL), and EOS dropped by over 10% in the past 24 hours. The total market cap of all coins dropped from the year-to-date high of $2.7 trillion to $2 trillion.
Ethena vs Solana vs EOS prices
US nonfarm payrolls (NFP) data
The falling crypto prices received another blow when the US published another solid nonfarm payroll (NFP) data. According to the Bureau of Labor Statistics (BLS), the economy added 206,000 jobs in June, higher than the expected increase of 191,000.
The figure was also higher than the ADP report on Wednesday, which showed that the private sector added 150,000 jobs in July.
The report also showed that wage growth remained steady in June as the average hourly earnings growth rose by 3.9% YoY). On the negative side, the unemployment rate rose from 4.0% in May to 4.1% in June.
These numbers mean that the labor market is doing well since it has added over 1.57 million jobs this year.
Implications for Ethena, Solana, and EOS prices
These jobs numbers mean that the Federal Reserve will not be in a hurry to start cutting interest rates since inflation has mostly held steady this year. The most recent data showed that the headline Consumer Price Index (CPI) slowed to 3.3% in May while the Personal Consumption Expenditure (PCE) remained at 2.5%.
In a statement this week, Jerome Powell, the Fed Chair, noted that the bank wants more evidence that inflation was falling. Minutes released this week showed that the committee anticipates one rate cut this year, possibly in December.
Therefore, the hawkish Federal Reserve will likely put more pressure on risk assets like Ethena, Solana, EOS, and Bitcoin prices.
— Gargoyle (@degargoyle) July 4, 2024Why is $BTC dumping?
This is the result of combined many factors
Mt. Gox, ETFs, halving, Germany, and much more
I've prepared a full analysis of the current situation 🧵👇 pic.twitter.com/9TPC4wPVA1
This trend will happen at a time when these coins are battling other risks. Bitcoin has already dropped below the neckline of its big double-top pattern pointing to more downside.
Germany has started liquidating its Bitcoin holdings, which has led to an increase in balances in exchanges. Wallets associated with Mt.Gox have also started moving their coins.
On top of this, the US political scene is changing, with the odds that Joe Biden will drop out rising. If he does, he will likely be replaced with a younger candidate with a higher chance of beating Donald Trump. Trump is seen as a better president for the crypto community.
Therefore, with cryptocurrencies facing weak technicals and fundamentals, there is a possibility that they will continue falling in the near term.