US Employment Data!

US non-farm employment data came above expectations, showing that the economy is still hot. The unemployment rate was also above expectations. These data reduced the possibility of the Fed cutting interest rates, reducing the expectation of a rate cut in September from 70% to 55%. This caused volatility in crypto markets. Bitcoin rose sharply before the data was released and then fell.

The connection between the Fed's interest rate decisions and crypto investing creates significant impacts on investors' risk appetite and market liquidity. High interest rates may cause investors to turn to safer investment instruments, which leads to a decrease in funds allocated to cryptocurrency markets. This is because high interest rates reduce the demand for risky assets by increasing borrowing costs and making returns from safe investment instruments attractive.

In the past, rising interest rates have caused declines in cryptocurrency prices. For example, in late 2017, the value of Bitcoin dropped significantly as the Fed was increasing interest rates. Similarly, the Fed's rapid interest rate hikes in early 2022 led to major declines in the values ​​of Bitcoin and other cryptocurrencies.

On the other hand, falling or remaining stable interest rates may encourage investors to take more risks, which may lead to increased investments in cryptocurrencies and rising prices. In 2020, the Fed reduced interest rates to near zero levels, resulting in large increases in cryptocurrency prices.

The expectation that interest rates will decrease in 2024 leads to positive movements in crypto markets.