Following the release of better-than-expected U.S. jobs data last Friday, both Bitcoin and Ethereum have experienced significant downward pressure as hopes for a Federal Reserve rate cut in September have dwindled. Despite this price drop, trading firm QCP Capital based in Singapore sees this as a favorable buying opportunity for investors.
The U.S. non-farm payroll data for May revealed that the economy added 272,000 jobs, surpassing the estimated 182,000 jobs. Additionally, the average hourly earnings saw an increase of 0.4% month-on-month, higher than the expected 0.3%. As a result, the probability of a 25-basis point Federal Reserve rate cut in September dropped from 85% to 60%, causing a decline in risk assets such as cryptocurrencies.
Major financial institutions like JP Morgan and Citi have retracted their forecasts for a Federal Reserve rate cut in July, with some even suggesting the possibility of rate hikes or further liquidity tightening. Bitcoin, which was approaching the $72,000 mark, experienced a 3% decrease to $68,400, with Ethereum following suit.
QCP Capital believes that as other central banks around the world lower borrowing costs, the Federal Reserve will face challenges in maintaining high interest rates. With the European Central Bank and Bank of Canada already cutting interest rates, the G7 countries have embarked on a cycle of monetary easing. This trend may prompt the Federal Reserve to follow suit, ultimately increasing market liquidity and driving demand for alternative investments like cryptocurrencies.