Bitcoin and Ethereum Prices Drop Amid Recession Concerns and Increased Liquidations
The cryptocurrency market experienced a significant downturn on Friday afternoon, with major assets like Bitcoin and Ethereum plummeting by over 5% following a challenging U.S. jobs report that also rattled the stock market, sparking concerns about a looming recession.
Bitcoin’s price dropped below $62,000, hitting a low of $61,308 according to CoinGecko data. It has since rebounded slightly to just above $62,000 but remains down approximately 5% from its peak of $65,505 within the last 24 hours.
In parallel, Ethereum saw a sharp decline, falling to $2,967 after previously surpassing the $3,200 mark. Currently trading at just under $3,000, Ethereum is down nearly 6% for the day. Other major cryptocurrencies also experienced similar or more significant declines, with Solana dropping over 7% to $154.
The increased volatility in the crypto markets led to a surge in liquidations of both long and short positions, totaling $269 million in the past 24 hours as reported by CoinGlass. Bitcoin liquidations accounted for $82 million of this amount.
This marks the second consecutive day of notable crypto liquidations as top asset prices continue to decrease. The release of a weaker-than-expected U.S. jobs report earlier on Friday seemed to unsettle markets across the board, resulting in red figures in both the stock market and subsequently in the crypto sphere. The report highlighted a rise in the unemployment rate alongside a significant shortfall in nonfarm jobs, sparking concerns about a potential recession in the U.S.
Despite the short-term impact on crypto prices due to the prevailing anxiety, some analysts suggest that Bitcoin could benefit in the long run from a weaker U.S. dollar and anticipated Federal Reserve interest rate cuts. James Butterfill, CoinShares Head of Research, indicated that the Fed’s loosened monetary policy could be favorable for fixed-supply assets like Bitcoin and gold.
The current market conditions underscore the ongoing uncertainty and volatility in the cryptocurrency space, with investors closely monitoring economic indicators and policy decisions for potential impacts on digital assets.
