Why the cryptocurrency market is down: Today, the cryptocurrency market is experiencing a significant drop due to several interrelated factors:
1. US Economic Data
The US Department of Labor reported that 272,000 jobs were added in May, exceeding expectations and raising the unemployment rate to 4% (Cointelegraph). This report has reduced expectations of an interest rate cut by the Federal Reserve, which has negatively affected risk assets, including cryptocurrencies.
2. Mass Liquidations
In the last 24 hours, more than $387 million in cryptocurrency positions have been liquidated, with the majority being long positions. This has put additional selling pressure on the market, causing steeper declines (Cointelegraph) (Mitrade).
3. Bearish Divergence on RSI
The Relative Strength Index (RSI) has shown a bearish divergence, indicating that although prices were rising, momentum was waning. This pattern usually precedes corrections in the market (Cointelegraph).
4. ETF Rejection Expectations
Earlier in the year, research from Matrixport suggested that Bitcoin ETFs might not be approved until the second quarter of 2024, causing a sell-off and a significant drop in prices (Mitrade).
These factors combined have created an unfavorable environment for cryptocurrencies in the short term, but the situation could change depending on future economic policy decisions and developments in the cryptocurrency market.