Recent data from the United States, combined with the Federal Reserve’s cautious stance and Quick Rate Adjustment (QRA), has had a significant impact on the market outlook, resulting in an increase in cryptocurrencies. Although the employment data released on Friday fell short of expectations, Non-Farm Employment reached 175,000 instead of the anticipated 240,000.
Federal Reserve and US Data
Contrary to predictions of a 3.8% unemployment rate, there was a slight rise to 3.9%. Additionally, the Monthly Average Hourly Earnings fell below the projected 0.3% rate, coming in at 0.2%. These figures indicate diminishing concerns about inflation and will influence future monetary policies.
Simultaneously, the Federal Reserve and the Treasury’s dovish positions have caused a significant shift in interest rate expectations, resulting in a decrease in US 2-year yields from over 5% to approximately 4.7%. Investors are now looking ahead to the next year, anticipating interest rate cuts. Consequently, the money market may adopt a more optimistic view of a weaker dollar.
Crypto Market Response
The crypto market has responded positively to these general market movements. As a result, there have been substantial net inflows of $378.3 million into Bitcoin spot Exchange Traded Funds (ETFs). The renewed interest in cryptocurrencies, particularly with the Grayscale Bitcoin Trust (GBTC) experiencing its first positive inflow, has attracted significant attention.
Retail Investors and Altcoins Outlook
Despite the positive outlook on interest rate cuts based on the latest market data, individual investors continue to shy away from the markets, particularly cryptocurrencies. However, this situation suggests that there may soon be a potential market recovery for altcoins, which is expected to occur after the summer months.
Historically, the return of individual investors to the market, coupled with the increase in value of smaller altcoins, has indicated market activity in the crypto space. This pattern may present an opportunity for those looking to position themselves before larger investors enter the market.
Furthermore, according to an analyst (see chart above), the market value of altcoins is displaying a technical formation that could trigger a significant price movement in the near future. The analyst suggests that the total Altcoin Market Value, which is showing an inverse head and shoulders formation, indicates a potential increase in market value that could lead to a move towards $4 trillion.
Disclaimer:
The information provided in this article should not be considered as investment advice. Investors should be aware that cryptocurrencies are highly volatile and therefore carry risks. It is recommended that investors conduct their own research before making any investment decisions.