The entire crypto market took a tumble today as Bitcoin dropped below to $70,000 and large-cap altcoins sold off.
The cryptocurrency market is down today, with the total market capitalization falling by 1.33% to $2.6 trillion on June 7.
Bitcoin BTC $69,423, the largest cryptocurrency by market capitalization, has fallen 2.7% to around $69,156. Meanwhile, Ether ETH
$3,693, the second-largest crypto, dipped 4.1% to trade around $3,675at the time of publication.
Investors enter risk-off mode after higher-than-expected U.S. jobs data
The crypto market was turning down for the second day on June 7 as market participants reacted to stronger than expected U.S. employment data, which vastly beat expectations to suggest that the labor market was coping with tight fiscal policy better than forecast.
On June 7, the U.S. Labor Department reported the addition of 272,000 jobs in May, far past estimates of just 185,000 and significantly higher than April’s 165,000.
In May, the unemployment rate grew to 4.0% for the first time since January 2022, versus estimates for 3.9% and April’s 3.9%.
This latest employment data reading has potentially pushed back the odds of the Federal Reserve lowering interest rates — a key prerequisite for a liquidity influx into risk assets and crypto.
The Federal Open Market Committee (FOMC) is due to meet on June 12 to discuss rates, with markets now seeing little prospect of a cut resulting from the next two such meetings.
According to the CME FedWatch tool, traders are placing the odds of a June 12 rate cut at just 0.6% and July 31 at 8.88% at the time of writing versus 46% for September and 47.4% for November.
This outlook is adversely affecting risk-on assets such as cryptocurrencies, emerging market stocks, bonds and even commodities.
Bloomberg Chief Economist Anna Wong commented on the data saying that the rise in the unemployment rate is the more important indicator of the reality of the state of employment in the country.
“We believe the latter currently offers a closer approximation of reality than payrolls, as BLS’ model for estimating business births and deaths – which added 231,000 jobs to the nonfarm-payrolls print in May – is lagging the reality of surging establishment closures and falling business formation. We think the underlying pace of current job gains is likely less than 100,000 per month.”
Over $380 million in liquidations accompany crypto market crash
The liquidation of long positions versus short ones across the broader crypto market has further fueled the underperformance of digital assets today.
Notably, the crypto derivatives market has witnessed over $387.83 million worth of liquidations in the last 24 hours, out of which $348 million were long. More than $249 million leveraged positions have been liquidated over the last hour alone.
More than 133,576 traders have been liquidated over the last 24 hours with the largest single liquidation order occurring on OKX crypto exchange involving an ETH/USD swap worth $5.20 million.
When long positions are liquidated, it generally involves selling off the asset (voluntarily or by the broker), which can drive the price down further.
TOTAL market cap’s RSI shows bearish divergence
The TOTAL market capitalization has been increasing since May 1 and gained momentum on May 20 as the anticipation and eventual approval of spot Ethereum ETFs pushed the broader crypto market higher.
The daily chart shows a bearish divergence in RSI preceding today’s drawdown. The RSI is a trend-following oscillating momentum indicator used to assess whether a market is overbought, oversold or accumulating.
A bearish divergence from the RSI occurs when an increase in price is accompanied by a momentum decrease, resulting in downward movements.
The bearish divergence could be a hint that the bears are in control of the market and could have plans to pull the TOTAL market value toward the 100-day simple moving average (EMA) at $2.402 in the short term.
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