Get ready for a bullish extension Crypto market drop viewed as brief shakeout
Following an unexpected surge in U.S. employment data revealing 272,000 new jobs in May, well above the anticipated 185,000, the cryptocurrency market suffered a significant sell-off. The robust job numbers suggest that the economy is weathering higher interest rates effectively, decreasing the likelihood of rate cuts, which has a direct impact on cryptocurrency investments.
In a related development, GameStop (NYSE: GME) witnessed a sharp decline of 40% in its share price after announcing a $32.3 million loss on $882 million in revenue. The company further disclosed plans to sell $175 million in shares, adding to the prevailing market uncertainty.
Bitcoin (BTC) experienced a notable drop from its recent two-month high around $72,000, leading to a downward trend across the entire cryptocurrency market, as per data from CoinMarketCap. This market downturn resulted in liquidations amounting to $411.05 million, with the largest single order of $409.51 million on the OKX crypto exchange. Of the total liquidations, $56.8 million were attributed to long Bitcoin positions.
Traders are now adopting a cautious approach, expecting further price declines. In the event of Bitcoin returning to $71,000, it could eliminate $1.40 billion in short positions, underscoring the anticipation of continued market volatility.
Despite the prevalent liquidations, some traders perceive the sell-off as a momentary shakeout rather than a sustained bearish trend. Renowned crypto trader il Capo of Crypto characterized the market reaction as a “shakeout,” where investors swiftly offload assets due to uncertainty. This sentiment was echoed by other analysts, pointing towards significant liquidations in Bitcoin and Ether (ETH) futures as a potential silver lining.
The recent leverage flush may pave the way for a more stable market as speculative positions get cleared out. Analysts are closely monitoring key support levels to determine the market’s next direction, with the monthly open around $67,500 deemed critical for Bitcoin to sustain its bullish momentum.
Despite the ongoing market volatility, some market experts view this dip as a buying opportunity. Markus Thielen, head of research at 10x Research, highlighted the nuanced nature of the employment data and indicated that the upcoming Consumer Price Index (CPI) report could be decisive. Should the CPI year-on-year remain at 3.3% or lower, it could propel Bitcoin to new all-time highs.
In a similar vein, pseudonymous trader Kaleo remains optimistic, suggesting that the market’s peak is still distant. Trader Jelle perceives the market dip as a minor setback before a potential rebound, hinting at a quick turnaround trade. At the time of writing, BTC was trading at $69,364.00.
As stakeholders navigate this turbulent phase, the prevailing sentiment leans towards a bullish continuation, with the recent sell-off viewed as a temporary shakeout rather than a prolonged downturn. It is worth noting that the content on this site should not be construed as investment advice, as investing is speculative and involves risks to your capital.