Key points
- The US job market crash and high unemployment rate cause Bitcoin to fall to $60,000.
- Bitcoin's MVRV ratio suggests that it is undervalued, indicating a possible market rally.
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The price of Bitcoin (BTC) fell below $60,000 on Saturday amid growing fears that the United States could be falling into recession, according to data from TradingView.
The recent price drop followed a difficult Friday marked by a weaker-than-expected US jobs report and significant cryptocurrency transfers by crypto lender Genesis, as reported by Crypto Briefing.
Labor Department data showed the U.S. economy added 114,000 jobs in July 2024, considerably less than the 175,000 estimated. The unemployment rate also unexpectedly rose to 4.3%its highest level since October 2021.
These figures fueled anxiety about the health of the US economy, especially after the Federal Reserve's (Fed) decision to maintain interest rates between 5.25% and 5.5% on Wednesday.
Federal Reserve Chairman Jerome Powell hinted that a rate cut could be considered in September if economic indicators show improvement. However, economists are concerned that the U.S. economy is weaker than the Fed has perceived. The current economic slowdown could Request an early rate reduction to boost demand.
The cooling labor market and rising unemployment rate triggered a sell-off in global stock markets. Major indices such as the Dow Jones Industrial Average and the S&P 500 plunged in early trading on Friday.
Bitcoinwhich started the week near $70,000, fell below $62,000 on Friday and extended its decline over the weekend, TradingView data shows. The flagship cryptocurrency is currently hovering around $60,000, a drop of more than 11% in a week.
As losses mounted, investor sentiment turned bearish. According to data from Alternative.me, the Crypto Fear and Greed Index fell to 37, switching from “greed” to “fear” for the first time in three weeks.
Bitcoin is preparing for a relief rally: Santiment
Bitcoin is primed for a price rally after a week of sluggish performance, cryptocurrency analytics firm Santiment said in a recent post on X.
📊 Cryptocurrency markets have been pulling back across the board, causing traders to once again call for BTC to drop below $50,000. However, history shows that when we see such low 7-day average returns for major-cap traders like BTC, ETH, ADA, XRP, DOGE, and LINK, the odds of a bounce increase significantly. image.twitter.com/cBGQ6cxyt2
— Santiment (@santimentfeed) August 2, 2024
According to Santiment, the market value to realized value (MVRV) ratio, which measures the average gain or loss of Bitcoin holders, is currently at -5.5%. Historically, such low levels have preceded price increases. The firm noted that Bitcoin experienced increases of 7% and 9% on two previous occasions (on July 4 and July 25) when the MVRV fell to this level.
Santiment also noted that other major cryptocurrencies, including Ethereum, Cardano, Ripple, Dogecoin, and Chainlink, are showing similar signs of undervaluation according to their MVRV ratios.
While past performance is not indicative of future results, data from Santiment suggests that a relief rally could be on the horizon for Bitcoin and some major altcoins.
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