Bitcoin and crypto prices have fallen sharply, wiping more than $100 billion from the combined market as $10,000 crash fears suddenly return.
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The bitcoin price, which crashed to around $60,000 per bitcoin last week, briefly bounced back amid wild rumors but has failed to hold onto those gains.
Now, as “panic” sweeps the bitcoin and crypto market, an expectation-beating jobs report has “collapsed” the odds of a March Federal Reserve rate cut, sending the bitcoin price sharply lower.
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Federal Reserve chair Jerome Powell is widely expected to leave interest rates on hold, with the hawkish outlook weighing on the bitcoin price and crypto market.
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“With the U.S. Treasury curve bear flattening with 2-year yields up eight basis points, odds of a March Fed rate cut collapsed down to almost zero,” Stephen Coltman head of macro at bitcoin and crypto asset manager 21shares, said in emailed comments.
The U.S. economy added 130,000 jobs added in January, according to a Wednesday report from the Bureau of Labor Statistics, smashing expectations of a 70,000 increase and a return to strength from 48,000 in December.
“The technical picture shows bitcoin testing critical support at the $58,000 to $60,000 range, where previous bull market cycles found major accumulation zones,” Jimmy Xue, chief operations officer at cross-asset liquidity infrastructure provider Axis, said in emailed comments.
“If this level holds, we could see a period of consolidation between $60,000 to $70,000 as overleveraged positions are flushed out. However, a break below $58,000 would likely trigger another wave of institutional selling, potentially targeting the $52,000-$55,000 zone where longer-term holders accumulated during 2023.”
The odds of a March interest rate cut—something that would generally been seen as supportive of the bitcoin price as it frees up money that could be put into risk assets—plunged to under 8%, according to CME’s FedWatch tracker, down from over 20% earlier this week.
The combined bitcoin and crypto market now looks in danger of dropping below the closely-watched $2 trillion level, down from over $4 trillion in October.
“The rebound is losing momentum, increasing the likelihood of a retest of last Friday’s lows at $2.2 trillion, potentially followed by a further 10% decline toward the $2 trillion level,” Alex Kuptsikevich, FxPro chief market analyst, said in email led comments.
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The bitcoin price has fallen sharply in recent weeks, fanning fears of a broader crypto crash.
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Meanwhile, the market is continuing to process U.S. president Donald Trump picking former Federal Reserve governor Kevin Warsh to take over from Fed chair Jerome Powell when his term ends in May.
A “hawkish shift in Fed expectations” has dragged on the bitcoin price all week, according to Andri Fauzan Adziima, research lead at Bitrue, who told The Block that Trump naming Warsh as his pick has signalled “tighter liquidity and fewer rate cuts ahead.”
“Traders now watch for stabilization around $60,000-$65,000 support or renewed macro easing to spark any rebound,” Adziima added.
The market is now turning to this week’s inflation report, due Friday, with volatility expected across gold, stocks, bitcoin and crypto markets.
“Softer inflation data would reinforce the case for lower rates,” Lukman Otunuga, senior market analyst at global broker FXTM, said via email.
“Gold continues to shine amid dollar weakness and shifting rate expectations, and a decisive break above $5,100 could trigger another bullish leg. With uncertainty around growth and inflation still high, volatility across currencies, equities, and crypto looks set to remain elevated.”