The recent decline in Bitcoin price is more than just a technical fluctuation, it is due to the significant revision in US employment data. The U.S. Bureau of Labor Statistics adjusted last year’s employment figures down by about 900 thousand people. This unexpected update was one of the main factors that shook the confidence in the market.
Unexpected Decline in Unemployment Data
Under normal circumstances, an employment increase of 130 thousand was recorded in January. However, the major revision of the year-wide figures completely changed the macro line. In particular, it was reported that a significant part of the positive perceptions about labor market power stemmed from temporary forecast models. It is emphasized that methods such as the “birth-death model” used can overestimate job creation during periods of economic change.
Cryptocurrency and Market Reaction
Uncertainty in data reduced risk appetite not only in the US but also in global markets. Following the announcement, treasury bond interest rates began to rise; 10-year bond yields climbed from 4.15 percent to 4.20 percent in a short time. Such sudden movements lead to increased volatility in cryptocurrencies and other risky assets.
While the increasing uncertainty in the markets started a deep selling wave in Bitcoin, especially the trend towards derivative products and intense hedging transactions by large investors (institutions and whales) came to the fore. The rapid decrease in the possibility of an interest rate cut in March changed the general atmosphere in the markets drastically. In a short time, the rate decreased from 22 percent to 9 percent.
According to the data presented by CME Group in this regard, warnings about increasing volatility in the market attract attention. It is noted that the risk of volatility continues in a significant part of Bitcoin’s circulating supply.
All eyes are once again on the bond market. It is stated that as long as the upward trend in interest rates continues, it is not easy for Bitcoin to find a stable ground. In this environment where liquidity has tightened, institutional investors began to act cautiously.
After the shock, some market participants raise the question of whether bottom levels have been formed in Bitcoin. However, current price behavior does not reveal a clear signal of recovery.
While all these developments increase activity in the cryptocurrency market, it is stated that uncertainty can also bring up new opportunities.
