Bitcoin Plummets Below $30K Before Rebounding, Sentiment Remains Bullish
In a surprising turn of events, bitcoin experienced a sharp decline below $30,000 due to the release of an unexpectedly torrid ADP private sector jobs report and a robust ISM Services Index. This marked the first time in almost two weeks that the largest cryptocurrency by market capitalization dipped below this threshold. However, it quickly regained momentum and surged back to $30,100, down only 1.3% over the past 24 hours.
The initial decline occurred shortly after bitcoin reached a new three-month high above $31,500, which was attributed to the investor bullishness resulting from multiple spot bitcoin ETF filings last month. Market observers had been hopeful that the U.S. Securities and Exchange Commission (SEC) would reverse its pattern of rejecting applications by prominent financial services firms. However, concerns about economic growth and inflation dominated sentiment on Thursday, overshadowing the optimism.
Ether, the second-largest cryptocurrency by market value, followed a similar downtrodden path as bitcoin. After the release of the ADP report, which showed the private sector adding 497,000 jobs, more than double the forecast, Ether quickly sank from a high above $1,950. The ISM Services Index further fueled concerns, rising to 53.9 in June, higher than the consensus estimate and the reading in May. These reports provided fresh fuel for the U.S. central bank to justify additional rate cuts in its efforts to tame inflation. The fear of a recession caused by such hawkishness weighed heavily on crypto and other asset markets.
Investors appeared less impressed by the Job Openings and Labor Turnover Survey (JOLTS) report for May, which revealed a decrease in job vacancies compared to April. As a result, ETH experienced a 3.1% drop from the previous day, while other major cryptocurrencies also plunged before regaining some ground.
Whale activity in the bitcoin market also drew attention. Despite an increase in the number of bitcoin whales, who are considered large holders of the cryptocurrency, there has been a reluctance among them to move their assets onto centralized exchanges. This indicates that these investors may be cautious due to exchange risks or regulatory hurdles. However, the combination of large entities holding increasing bitcoin supplies and a decreasing supply to exchanges suggests a bullish sentiment among investors.
Looking ahead, market analysts anticipate further rate hikes from the Federal Reserve, but expect that full-on bull mode for bitcoin may not be realized until next year’s Bitcoin halving. Nevertheless, an increasingly optimistic sentiment is prevalent in the market, and the next 18 months are expected to be exciting.
In other news, Asia equity markets experienced declines in early trading, with the Hang Seng and Nikkei losing about 1% and 0.5%, respectively. This followed the decline in U.S. indexes, with the Nasdaq and S&P 500 sinking 0.8%. Yields on 2- and 10-year U.S. Treasurys rose, while safe-haven gold edged up.
Overall, the cryptocurrency market continues to be volatile, influenced by economic indicators, investor sentiment, and regulatory developments. While bitcoin briefly dipped below $30,000, it quickly regained ground, reflecting the resilience and bullish sentiment among market participants.