After the Friday release of the US jobs report, sentiments surrounding high-risk digital assets turned sour. Consequently, various cryptocurrencies, including Bitcoin saw a dip in price on Monday. Analysts predict that further volatility is yet to come and that holders should prepare to weather out the storm.
Bitcoin Price Falls By 1 Percent
Over the last day, Bitcoin’s price has reduced by 1 percent, going down to $19,250. Just last week, the reigning cryptocurrency was valued above $20,000 before falling after the jobs report. Over the weekend, its prices continued to fall. At this point, if it moves below $19,000, which is likely, it will start back at its yearly low of $18,500.
Bitcoin Prices Correlate with Stocks
Prices for Bitcoin correlate with that of risk-sensitive assets. These include stocks, which have dropped over the past 10 months alongside the S&P 500 and Dow Jones Industrial Index. As of now, the Federal Reserve has implemented stringent monetary conditions to face off rising inflation rates. As they raise interest rates, it reduces the demand for digital assets such as Bitcoin.
As October came around, there were high expectations that the Federal Reserve would take things slow when it came to raising interest rates. This is especially considering the number of agencies that have highlighted an increased risk of the recession that comes with growing interest rates. Unfortunately, the jobs report on Friday showed that the US economy has yet to break. This reduces the chances of getting any relaxation from the Federal Reserve.
US Consumer Price Index Could Determine Fate of Cryptos
Due on Thursday, the US Consumer Price Index readings will bring about a major change for cryptocurrencies and stocks. The data will depict whether or not inflation has peaked, or if growing prices are still prominent. In turn, it will determine how aggressive the Federal Reserve will be when deciding on its upcoming monetary policy in November.
In the last few weeks, crypto analysts have observed some fading in the correlation between Bitcoin and stock prices in the last few weeks, but the Friday selloff shows that it has held on. Since the correlation has remained strong up until now, it’s unlikely that it will diminish by the time Thursday’s data comes in.
Analysts have also warned holders about the lower volatility that cryptos have shown compared to stocks. For instance, Bitcoin stayed within a range of $19,000 to $24,000 over the last couple of months. Meanwhile, cryptocurrency values didn’t swing as much as they would have as stocks have sold off in the past weeks. Nevertheless, this could possibly be a precursor for a high-volatility event.
Aside from Bitcoin, the second-biggest cryptocurrency, Ethereum, went down by 1 percent as well. The smaller altcoins grew weaker, such as Cardano, which went down by 2 percent, and Solana, which was down 1.55 percent.