According to CoinDesk: In the wake of hotter-than-expected U.S. jobs data that dampened hopes for a Federal Reserve interest rate cut in September, QCP Capital, a Singapore-based trading firm, sees the price drop in Bitcoin (BTC) and Ethereum (ETH) as a prime "buy the dip" opportunity.
Market Reactions to Payroll Data:
- Jobs Report Impact: Friday's non-farm payrolls data revealed the U.S. economy added 272,000 jobs in May, significantly surpassing the estimated 185,000 and April's revised 165,000.
-Immediate Market Response: The jobless rate ticked up to 4%, while average hourly earnings rose by 0.4% month-on-month, above the expected 0.3%. This led to a reduction in the likelihood of a 25 basis-point Fed rate cut in September from 85% to 60%, sending risk assets including cryptocurrencies lower.
Cryptocurrency Price Movements:
- Bitcoin and Ether: Post-report, Bitcoin fell almost 3% to $68,400, down from near $72,000, while Ether and the CoinDesk 20 index mirrored Bitcoin's downward trend.
- QCP Capital's Stance: Despite the downturn, QCP Capital views this as a buying opportunity, anticipating at least one Fed rate cut in the future.
Global Interest Rate Dynamics
QCP Capital noted that keeping U.S. rates elevated would be challenging as other central banks ease their borrowing costs. The European Central Bank and the Bank of Canada recently cut rates, initiating a wave of rate reductions within the Group of Seven (G7) nations. MacroMicro data shows an increase in rate cuts by central banks this year, which QCP Capital believes could lead the Fed to follow suit.
Strategy and Market Sentiment
QCP Capital's market update highlighted:
- Rate Cut Expectations: The markets are expected to increasingly price in at least one Federal Reserve rate cut amid global easing trends.
-Opportunity: The trading firm recommends buying the dip, anticipating that the global trend of rate cuts will bolster demand for alternative investments like cryptocurrencies.
- Bullish Flows: QCP observed a bullish sentiment, with increased activity in selling aggressive puts and buying call spreads, especially in Bitcoin.
The recent dip in Bitcoin and Ethereum prices, triggered by stronger-than-anticipated U.S. jobs data, is seen as a strategic entry point by QCP Capital. As global central banks move towards easing, the firm anticipates the Federal Reserve may also adopt a similar stance, creating favorable conditions for a potential rebound in cryptocurrency markets.