🌎 Bitcoin Drops Below $55k, Altcoins Plummet Amid Strong Jobs Data

It was a challenging day in the crypto industry on Friday as Bitcoin price dropped below the crucial support of $55,000. Most altcoins like Ethena (ENA), Solana (SOL), and EOS saw declines of over 10% in the past 24 hours. The total market cap of all cryptocurrencies fell from a year-to-date high of $2.7 trillion to $2 trillion.

US Nonfarm Payrolls (NFP) Data Impact

The decline in crypto prices was exacerbated by the release of strong nonfarm payroll (NFP) data from the US. According to the Bureau of Labor Statistics (BLS), the economy added 206,000 jobs in June, surpassing the expected increase of 191,000. This figure also exceeded the ADP report from Wednesday, which indicated that the private sector added 150,000 jobs in July.

Additionally, the report showed steady wage growth, with average hourly earnings increasing by 3.9% year-over-year. However, the unemployment rate rose slightly from 4.0% in May to 4.1% in June. These numbers suggest a robust labor market, with over 1.57 million jobs added this year.

Implications for Ethena, Solana, and EOS Prices

The strong jobs data implies that the Federal Reserve is unlikely to reduce interest rates soon, as inflation remains relatively stable. Recent data showed the headline Consumer Price Index (CPI) slowed to 3.3% in May, while the Personal Consumption Expenditure (PCE) remained at 2.5%.

In a recent statement, Fed Chair Jerome Powell indicated that the bank seeks more evidence of falling inflation. Minutes released this week revealed that the committee expects one rate cut this year, possibly in December. As a result, a hawkish Federal Reserve could exert additional pressure on risk assets like Ethena, Solana, EOS, and Bitcoin.

Factors Behind Bitcoin’s Decline

Bitcoin’s recent drop can be attributed to a combination of factors. Notably, Germany has started liquidating its Bitcoin holdings, leading to an increase in exchange balances. Additionally, wallets associated with Mt. Gox have begun moving their coins.

The US political scene is also evolving, with rising speculation that Joe Biden may not run for re-election. If Biden steps aside, a younger candidate with a higher chance of defeating Donald Trump might replace him. Trump is perceived as more favorable to the crypto community.