Bitcoin price could be pressured by the accelerating labor market in the United States, the world’s largest economy. The non-farm employment report published on June 7 measures the change in the number of people employed in the previous month, excluding the agricultural sector. With non-farm employment exceeding expectations, investors may worry about further tightening of monetary policy.
Why Did Bitcoin Price Drop?
Bitfinex analysts believe this could cause Bitcoin to close below the weekly $70,000 level due to reduced investor appetite for risk assets:
“If NFP expectations are significantly exceeded, this could signal a stronger economy and potentially lead to fears of monetary policy tightening. As investors rebalance towards traditional assets, this could create downward pressure on Bitcoin.”
However, non-farm employment came in stronger than expected, exceeding the previously predicted 182,000 by creating over 272,000 new jobs. Among other significant macroeconomic developments, the European Union became the second major economy after Canada to cut interest rates this week.
European Central Bank (ECB) lowered its benchmark lending rate from 4% to 3.75% ahead of elections across the EU. This marks the central bank’s first rate cut in five years. According to Bitfinex analysts, the decision could add more liquidity to Bitcoin:
“The rate cut could weaken the euro and potentially increase demand for alternative assets like Bitcoin. The increased liquidity from this monetary expansion could also support risk assets, including cryptocurrencies.”
What Is Happening with ETF Funds?
Positive institutional inflows from US spot Bitcoin exchange-traded funds could help Bitcoin close the week above the critical $70,000 level.
So far this week, US spot Bitcoin ETF funds have achieved over $1.54 billion in cumulative net inflows. According to Dune data, based on current inflows, ETF funds are set to accumulate 3.74% of the annual Bitcoin supply.
US Bitcoin ETF funds saw a collective inflow of $488.1 million on June 5. ETF funds recorded their second-best inflow day on June 4 with $886.6 million. As of February 15, Bitcoin ETF funds accounted for approximately 75% of new investment in the world’s largest cryptocurrency, surpassing $50,000.
