Interest reduction of the Fed untrue: effects on crypto

According to the latest data from the CME Fedwatch Tools, the likelihood of a interest rate reduction in the FED in July has dropped to less than 5 percent, which could have negative effects on the crypto market.

Falling interest reduction expectations could Cryptocurrencies make less attractive for investors.

US labor market report and its effects

The United States' Juni Habor Market Report, published by the Bureau of Labor Statistics, showed that the unemployment rate has dropped to 4.1 percent, from 4.2 percent in May and lower than the forecast 4.3 percent.

“The US unemployment rate rose to 4.1 percent in June, the lowest level since February. It remains significantly below the historical average of 5.7 percent,” wrote Charlie Bildello.

Employers across the country added 147,000 jobs in June. This corresponds to the average number of jobs that were added every month last year (146,000).

The sectors, who recorded employment, were state jobs and healthcare. The federal government, on the other hand, experienced job cuts.

“92 percent of the 147,000 jobs allegedly created in June were in the government, health or social service sector. Production continued to lose jobs. These unproductive jobs increase our trade deficits and lead to more public debt and higher inflation. Investors are not deceived forever,” wrote the economist Peter Schiff.

Despite the criticism, the bond market reacted quickly. After the report was published, the 10-year government's return rose to 4.36 percent. But why did that happen?

Because the economy is going well, investors are less worried about the future and are ready to invest in safer options such as US state bonds. When more people buy bonds, interest rates (returns) rise on it.

Fed interest reduction unlikely: Bärisch for crypto?

In addition, these strong economic indicators indicated that the Federal Reserve could have fewer reasons for a interest in interest in July. The CME Fedwatch Tool illustrated this change. The likelihood of a rate of interest in July has dropped to 4.7 percent, from a 25 percent chance of a reduction.

“The chances of reducing the interest in July have broken down-from 25 percent to less than 5 percent overnight. Why? Increasing, customs-driven inflation and a surprisingly strong labor market report hold back the Fed for the time being. No reduction = risk systems remain careful,” posted a crypto education provider, crypto.

The Federal Reserve has kept the interest rates between 4.25 percent and 4.5 percent stable since December. This has caused President Trump's criticism, who even threatened to relieve Fed chairman Jerome Powell. However, Powell defended his position.

In the meantime, this change in interest expectations could create a headwind for the crypto market. Higher interest rates make traditional investments such as bonds more attractive, which may be the attention of more risky systems such as Cryptocurrencies distracts. As a result, the falling demand could burden the courses.

Despite the challenges in the current economic situation, several bullish catalysts remain for the market, in particular Bitcoin. According to Cryptosrus, the global money supply is recently at 55.48 organic. USD increased. In addition, the US dollar had its worst performance in the first half of the year since 1973.

According to Kalshi, a predictive platform, the entire US debt is expected to be astonishing 40 organic this year. USD increase.

Bitcoin as protection

As a result, increasing public debt and concerns about inflation and government spending BTC could make an increasingly attractive protection.

“In the meantime, the Bitcoin diagram looks like it was fixed to $ 170,000-and it knows what's coming. Fiat is expanding. BTC strives for escape speed,” said Cryptosrus.

Since traditional financial systems are under pressure, Bitcoin And other digital assets represent attractive options for investors who are looking for diversification and protection against economic instability.