Bitcoin Probe Turns South

Bitcoin Probe Turns South after US Jobs Report

Premier cryptocurrency, Bitcoin, struggled for momentum after the latest US government jobs report. On the first Friday of June 2022, Washington’s report showed that jobs did not grow as expected in May. This could mean that the Fed is doing something right in its latest attempts to steady the economy through the stormy waters of inflation. How is this affecting the world’s most valuable cryptocurrency?

Bitcoin has traded for $29,500 in the hours following the announcement – that is a dip of 1.7 percent over twenty hours.

Crypto enthusiasts, traders, and analysts have keenly followed the Fed’s actions because since many believe the Federal Reserve Bank’s $4 trillion-plus of bill minting over the last few years could have precipitated prices for risky assets.

President Joe Biden and the Fed have committed to tapering the fastest inflation the US has witnessed in four decades. As a result, Bitcoin and stock prices have come under massive pressure.

In traditional markets, US stock futures also plummeted, as did European indexes. Gold didn’t defy gravity either, dipping 0.5 percent to $1,860 per ounce.

The US Bureau of Labor Statistics added that employers created 390,000 jobs in May. This was a significant step backward from the 436,000 reported in April. Yet, it beat the anticipated 325,000 that experts expected.

MarketWatch reported lower prices for gold after the report that job growth outpaced expectations. Analysts believe gold will struggle if the US dollar remains strong in the forex markets, a scenario that’s already happening in theory when the Fed raises interest rates.

Is Crypto Headed for the Trenches?

While Bitcoin’s price has steadily slid downwards over the last nine weeks, analysts continue to ponder if the marvel of cryptocurrencies has finally disappeared or is ready to do so.

“Crypto winter” refers to the dark period in 2018 when BTC fell 73 percent, accompanied by a crash of top tokens minted through ICOs or “initial coin offerings.” Cryptocurrency companies downsized, Bitcoin miners swiftly moved on to new projects, and headlines everywhere enjoyed the breather.

In the first five months of 2022, prices have gone 35 percent lower, and there are indications that a repeat of 2018 is set firmly on the horizon.

Two exchanges, Coinbase and Gemini, have continued to cut costs in unconventional ways. This suggests that even the industry behemoths are not treating the pullback with kid’s gloves.

On the miner side, Riot Blockchain, the world’s biggest Bitcoin miner on any index, disposed of more than fifty percent of the BTC it mined in May. This practice is now common among Bitcoin miners, who in the wake of falling prices, are milking their assets to fund operating budgets. High energy prices, exacerbated by Russia’s invasion of Ukraine, continues to chip away ever-decreasing profits.

QCP Capital, extrapolating from 2018, is deducing that Bitcoin could eventually touch base at $10,000. However, it took a period of around 1 year for it to find this bottom, so there’s probably time before this reality occurs.

Why is BTC Still Pulling Back?

The Federal Reserve Bank and other central banks withdrawing stimulus liquidity have been a principal reason for the continued pullback. Riskier tokens have benefited the most from these banks’ balance sheet expansions.

As DeFi and memecoins endure the biggest draw-downs and inflation is checked, coins with the lowest utility and highest multiples get to keep the short end of the stick.

The Way Forward

The downward spiral of Bitcoin and other cryptocurrencies looks set to continue, but things could well turn around pretty soon. The Fed has a tough job of sustaining its balancing act for the economy. It’ll probably take some negative data to effect the reversal of current policy, getting things back to where they once were. Only then could Bitcoin regain its battered value and pride.

Barinem Pene Verified

Barry Pene is a stern blockchain research/copywriter. Barry has been trading cryptos since 2017 and has been invested in issues that would put the blockchain industry on the right pedestal. Barry's research expertise cuts across blockchain as a disruptive technology, DeFis, NFTs, Web3, and reduction of energy consumption levels of cryptocurrency mining.

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