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10/06/24
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QCP Capital Sees U.S. Jobs Data-Induced Dip in BTC and ETH as an Opportunity for Gains
United States job numbers came in hotter than anticipated on June 7 and the performance of BTC and ETH has been towards the downside, as the data reduced hopes that the U.S. Fed will cut interest rates in September.
QCP Capital’s report shows that the decline in the prices of BTC and ETH is a chance for traders to position themselves for gains. U.S. non-farm payrolls data released last Friday revealed the addition of 272k jobs last month, quite higher than the expected addition of 185k and significantly above the downwardly revised 165k recorded in April.
There was a 4 percent increase in the unemployment rate, while the average hourly earnings m/m increased by 0.4 percent, relative to a 0.3 percent increase forecast. After the jobs data was released, markets cut the chances of the Fed trimming rates by 25 basis points in September from 60 percent to 85 percent.
The reduction prompted a pullback in risk assets, including crypto. Similarly, Citi and JPMorgan scrapped predictions of a rate cut next month after the data was released. The price of BTC, which seemed ready to breakout past $72k level fell to around $68.4k, according to CoinGecko data.
According to QCP Capital, it will be difficult for the Fed to keep rates elevated while other apex banks are cutting borrowing costs. “Strong upside surprised on NFP (272K vs 182k), higher payrolls came with higher unemployment (3.9% to 4.0%). It was confusing enough to trigger a risk-off ahead of U.S. inflation numbers and FOMC,” said QCP Capital.
The Bank of Canada and the European Central Bank trimmed rates last week, with markets widely expecting more apex banks to do the same. “We agree that this is a good opportunity to buy the dip as the markets will increasingly price in at least one Fed rate cut from here. It will be difficult for the U.S. to ignore as the rest of the world continues to cut rates,” said QCP Capital said.
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