Bitcoin Hits New Local Low Amid Inflationary Concerns
Bitcoin experienced a significant drop on Thursday, reaching its lowest point in nearly seven months, largely influenced by the latest U.S. jobs report that indicates ongoing inflationary issues.
The cryptocurrency fell by 7.32%, settling at $85,700 by late Thursday evening. This price marks a 32% decrease from Bitcoin’s all-time high of $126,080, recorded in October.
According to the Crypto Fear & Greed Index, which currently registers at 11, this reflects “extreme fear” among investors, suggesting a lack of confidence about future market performance. Overall, the cryptocurrency market saw a decline of 6.62% in the same 24-hour period.
“Bitcoin dropped below $85,000 as the surprise surge in U.S. job numbers dampened hopes for an interest rate cut in December,” stated Vincent Liu, chief investment officer at Cronos Research. “With liquidity remaining thin, there’s a wave of short-term profit-taking, leading to these market movements. Traders are adjusting their strategies based on macroeconomic signals.”
The delayed report on September’s nonfarm jobs, released Thursday, indicated that the U.S. economy added 119,000 jobs for the month, surpassing the Dow Jones consensus estimate of just 50,000 jobs.
Rising inflation figures have further fueled anxiety regarding the Federal Reserve’s monetary policies, placing additional downward pressure on the crypto market. As per CME Group’s fedwatch tool, the likelihood of the Fed cutting interest rates next month sits at around 35.4%.
“Everyone is watching for any indication of a rate cut in December, which might already be factored into the current pricing,” Liu elaborated. “Bitcoin could see a rebound, but for any lasting rally, we’ll need new capital influx or increased demand on-chain.”
Experts from Kronos Research have pointed out that the market won’t just require a pause in the Fed’s tightening policy. It would also need fresh investment, robust demand, and a shift in the overall market sentiment. “Without those four factors, any bounce in prices could be fleeting,” Liu cautioned.
In related insights, LVRG research director Nick Luck remarked that the current market correction represents a “healthy re-evaluation” of the inflated positions that arose following last month’s price spikes.
Luck mentioned that “on-chain metrics” suggest that indications of capitulation are nearing an end, which implies that selling pressure in both spot and futures markets is stabilizing.
