Bitcoin is losing value again, dropping to new local lows. The latest data from the US labor market triggered another wave of selling.
The BTC price has dropped to about 84 thousand USD – the lowest in almost seven months.
The reason is fresh data from the USA, which reduced the chances of a rate cut in December.
Tom Lee indicates that the problem remains the lack of capital from market makers.
Bitcoin is under strong pressure again.
The price of bitcoin fell today to about 84,500 USD, which means a 32% correction compared to the record from October (126,080 USD).
The Fear and Greed Index remains at 11 points, signaling “extreme fear,” and the entire cryptocurrency market shrank by 6.62% in the last 24 hours.
According to Vincent Liu from Kronos Research, the drop below $85,500 was triggered by “better than expected employment data, which weakened expectations for a rate cut in December.” Liu adds that liquidity is low, and profit-taking further drives the declines.
Employment data hits BTC
The new report for September showed that the US economy created 119 thousand jobs, significantly more than the expected 50 thousand.
Although unemployment has slightly increased, the market interprets this data as a signal that the Fed does not need to rush to ease monetary policy.
The market – according to Liu – would need four factors for a rebound to have a chance:
halt of QT,
new capital,
greater on-chain demand,
improvement in sentiment.
Without them, “any rebound may fail.” Nick Ruck from LVRG, on the other hand, claims it is a “healthy correction.”
And yet! Liquidity in the background is starting to rise
The influx of funds from TGA, i.e., the U.S. Treasury Department's vault, is slowly increasing market liquidity. Since the end of October, $100 billion has already entered the economy, which lowers financing rates (SOFR).
The more capital from TGA, the stronger the liquidity impulse — although the market still counts on the Fed lowering rates on December 10.
“Liquidity, you fool!” — that is the problem of market makers
Tom Lee from BitMine believes that the key reason for the current declines may be the ongoing liquidity crisis of market makers, initiated by the crash on October 10, when $20 billion disappeared from the market.
If market makers have a capital gap, they must limit trading — and when prices fall, it forces additional selling. Lee calls this the “paralyzing effect of market makers.”
In his view, the stabilization process may take several more weeks:
“In 2022, it took eight weeks. Now only six have passed.”
