The recent crypto market crash worsened investors’ concern about the recession sparked by US job data, resulting in a decline in BTC, ETH, and other digital currencies.
The recent crypto market crash has sparked new concerns among investors, particularly in light of the recent US Job data, which has solidified speculation regarding a potential 0.5% rate cut by the US Federal Reserve. Today, the crypto sector has also registered a decline in trading and the dismal US stock market.
As a result of the recent decline in prices, market observers are investigating potential causes. Therefore, we will briefly examine all potential factors that may have contributed to the recent adverse trend in the market.
Reasons For The Crypto Market Crash
- US Job Data volatility
The most recent US nonfarm payroll data indicated that the United States has added fewer jobs than Wall Street anticipated. Furthermore, the unemployment rate remained at 4.2%, initially appearing to have incited investor optimism.
Nevertheless, the market experienced significant selling pressure shortly after the data was released, as evidenced by the recent performance of the US stock market. Furthermore, the job data, which has caused significant volatility in the broader financial market, will likely contribute to the most recent crypto market crash.
- Recession Concerns Push Crypto Market Crash
Investors have also been alarmed by the most recent job data, as numerous market analysts predict a potential recession in the United States. Market apprehensions have been precipitated by the recent statements of Chicago Fed President Austan Goolsbee, who has suggested that a recession may be imminent.
This development could have significantly impacted the sentiment of traders, potentially resulting in a significant decline in the broader financial market. Nevertheless, it is important to acknowledge that some market analysts regard Bitcoin and other cryptocurrencies as protective against economic downturns. Nonetheless, it is anticipated that the market will soon regain its momentum.
For context, a recent Morningstar report cites Vetle Lunde, a senior analyst at crypto research firm K33 Research, suggesting that a recession could benefit Bitcoin in the long term. According to the analysis, investors pursue scarce assets such as bitcoin and gold in times of economic turmoil. Bitcoin’s resilience may prevail, as this divergent perspective underscores the complex relationship between macroeconomics and cryptocurrency markets.
Decline in the stock market
Today’s session for the US equity market concluded with all three stock indices closing in the negative. The Nasdaq and S&P 500 experienced a 2.55% and 1.73% decline, respectively, while the DJIA closed at 1.01% down, according to the most recent data.
In the interim, the crypto market fluctuates with the US stock market, per numerous market analysts. Citi analysts recently stated in a report that the stock market is significantly correlated with equities, particularly in light of the macroeconomic challenges and other uncertainties.
However, the recent performance of the US stock market also indicates that investors’ risk-bet appetite for risk-bet assets is diminishing, which may have contributed to the recent crypto market crash.
The Reasons for the Crypto Market Crash: Why Are BTC, ETH, and Other Cryptos Declining?
The AI Coins sector was one of the least performing sectors today, as NVDA stock experienced a decline of over 4%. On Friday, the stock price of Nvidia closed at $102.83, a 4.09% decrease. Additionally, the company experienced a further decline in the after-hours trading session.
In addition, the price of Bitcoin (BTC) decreased by 5.07% to $52,893, while its trading volume increased by 58% to $49.02 billion. At the same time, the price of ETH plummeted by nearly 7% to $2,217, and its trading volume increased by 88% to $25.56 billion.
The most recent sentiments indicate that the leading altcoins generally follow the performance of Bitcoin. In light of this, it appears that investors are refraining from investing following the recent upheaval in the price of Bitcoin.
Additionally, the market sentiment has been further dampened by the predictions of experts such as Peter Brandt, who envision a Bitcoin collapse to $46,000. Nevertheless, market analysts anticipate that the economic concerns will generate temporary pressure on the crypto market despite their continued optimism regarding the long term.
