Payrolls-Led Bitcoin, Ether Price Swoon Is ‘Buy the Dip’ Opportunity, Crypto Trading Firm Says

QCP said that the post-payroll price drop of BTC and ETH is a good opportunity to buy the dip.

The trading firm added that the Fed’s G7 interest rate cuts would be hard to ignore.

Bitcoin {{BTC}} and Ethereum {{ETH}} have lost ground since Friday’s warmer-than-expected US employment data dampened hopes for a Federal Reserve interest rate cut in September.

The post-report price drop in the two largest cryptocurrencies presents a good opportunity to grab a bargain, according to QCP Capital, a Singapore-based trading firm.

Friday’s nonfarm payrolls data showed the U.S. economy added 272,000 jobs in May; this was well above the 185,000 forecast and well ahead of April’s downwardly revised 165,000. The unemployment rate rose to 4%, while average hourly earnings (the sticky inflation component) increased by 0.4% on a monthly basis, above expectations for a 0.3% increase.

Markets immediately reduced the likelihood of a 25 basis point rate cut by the Fed in September from 85% to 60%, sending risky assets including cryptocurrencies lower. While JPMorgan and Citi canceled their forecasts for a Fed rate cut in July, some observers revived interest rate hikes or additional liquidity tightening. According to CoinDesk data, Bitcoin, which seemed ready for a break above $72,000, fell almost 3% to $68,400. Ether and the CoinDesk 20 index followed Bitcoin’s lead.

QCP Capital said the Fed will have a hard time keeping interest rates high while other central banks are lowering borrowing costs.

The company said it “surprised a strong rise in NFP (182K vs. 272K), with high payrolls coming along with high unemployment (3.9% to 4.0%), enough to trigger a risk-off ahead of US inflation numbers and FOMC.” It was confusing.” said. market update.

“We agree that this is a good opportunity to buy the dip as markets increasingly price in at least one Fed rate cut from here. It will be hard for the US to ignore this as the rest of the world continues to cut rates.” QCP Capital said.

The European Central Bank and the Bank of Canada cut interest rates last week, prompting the Group of Seven (G7) to begin the so-called easing cycle. According to MacroMicro, the number of central banks whose last move was to cut interest rates has increased this year.

Other central banks, including the Fed, may soon join the fight for tit-for-tat rate cuts (often called currency wars) as part of a strategy to manage rising public debts, inadvertently increasing demand for alternative investments such as cryptocurrencies.

“Our desk has seen bullish flows on this dip, particularly from both aggressive sellers of put puts and buyers of call spreads,” QCP said. said.