Bitcoin price drops 5,000 USD: What happened?

Bitcoin has fallen by over 5,000 USD in the last 24 hours. But what is behind this decline? It seems that macroeconomic data from the US caused a small shock reaction in the financial markets. Interestingly, it was surprisingly strong economic data.

Labor market in the USA stronger than expected

Initially, the number of job vacancies was significantly higher than forecast. Although the most important labor market report is not expected until Friday, the US economy continues to show robust figures.

So why are the markets reacting with a decline? Quite simply: these strong data give the US Federal Reserve additional room to continue its strict monetary policy.

The same goes for the ISM Services PMI, which serves as an indicator of the health of the services sector in the US and was well above expectations yesterday.

At any level, there is currently no sign of a recession in the US. Therefore, there is less and less reason for the US Federal Reserve to stimulate the economy, which could increase concerns about inflation somewhat.

Apparently, the market was secretly hoping for weaker economic data that could have prompted the central bank to cut interest rates more quickly. However, since the current data has been strong, this could explain the decline in Bitcoin’s price.

First interest rate cut not until June?

Due to the strong economic data, the market does not expect the next interest rate cut by the US Federal Reserve until June 2025.

However, it is important to know that the futures market can often be wrong. So why is this data relevant? It mainly provides information about the current market positioning.

The market is currently expecting few rate cuts and the economy to remain strong in the coming months. This means that any negative surprise in the data is likely to cause minor shockwaves in the markets.

On the other hand, we must not forget that the US economy as a whole is strong. These positive figures are not necessarily negative.

In fact, Bitcoin needs a strong US economy to continue bull markets.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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