- Dow Jones fell over 1,000 points on May 5, the highest single-day decline since 2020.
- In April, the US economy added 428,000 jobs.
- The jobless rate was 3.6% in the month.
The global crypto market slumped over 8% on Friday as major cryptocurrencies declined, slipping by more than 9% close on the heels of the Fed's rate increase. Investors expect a far more aggressive rate stance by Fed in June when it meets for the next policy discussions.
Let’s discuss the possibilities that could have hit the market sentiment on Friday morning.
Why is the crypto market down?
As major cryptocurrencies like Bitcoin continue to decline, the impact was felt in the crypto market on Friday. It comes after the stock market dropped sharply on Thursday.
As seen in the past sessions, the crypto market generally moves in tandem with the stock market. The Dow Jones dropped by more than 1,000 points on Thursday, its highest single-day decline since 2020. Likewise, the tech-savvy Nasdaq Composite declined around 5%.
The Federal Reserve’s decision to increase the interest rates by a 50 basis point on Wednesday rocked the market in the following session. The central bank also said it would start rewinding its US$9 trillion asset portfolio from June.
But investors anticipate a more aggressive stance by the bank on inflation, which may have plummeted the market sentiment, causing a panic sale. They feared further hikes could lead to an economic recession.
Also Read: Why is Serum (SRM) crypto gaining attention?
The crypto market is highly volatile and prone to various risks. However, price fluctuations in digital currencies are not new. The recent movement in the crypto market coincided with the stock market’s deceleration; thus, it may be reaffirming the belief that the stock market movement may have a bearing on the crypto market and the economic outlook.
The Labor Department’s latest jobs report for April showed that the US economy had added 428,000 jobs in April, its 12th consecutive monthly gain. The jobless rate was 3.6%.
Also Read: What is Rally (RLY) crypto?
In a separate report on Tuesday, the department said that the job openings in the US climbed to 11.5 million, a record high since 2000. Still, a tight labor market offers a significant challenge for the economy as wage growth to retain workers could lead to higher inflation.
It could be one of the reasons why investors may be expecting more rate hikes in the coming days. These decisions, therefore, could impact both the crypto and the stock market.
Also Read: Elon Musk secures US$7.1 bn in financing commitment for Twitter buyout
Source: ©2022 Kalkine Media®
The global crypto market was down 8.14% to US$1.65 trillion on Friday morning, while its trading volume in the trailing 24 hours rose 37.66% to US$128.57 billion. Bitcoin (BTC) lost 9.13% to US$35,873.92, while Ethereum (ETH) fell 8.29% to US$2,683.99 at 9:13 am ET.
Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.