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The U.S. unemployment rate reached its highest since December 2021, potentially boosting Bitcoin prices as investors turn to alternative assets amid economic concerns.
Economic Indicators Worsen
A worsening labor market and rising unemployment in the United States, which is the largest economy in the world, could turn out to be beneficial for Bitcoin and other risk assets.
It was previously projected that the unemployment rate in the United States would be 4.0%; however, it actually reached 4.1%, which is the highest level it has been since December 2021.
In the month of June, the economy of the United States added 206,000 new employment. This is far lower than the 272,000 jobs that were added in May, which was then corrected to 218,000, according to the nonfarm payroll data that was issued by the Bureau of Labor Statistics on July 5. Although this is more than the 191,000 jobs that were anticipated, it is still significantly fewer than before.
According to Jag Kooner, who is the head of derivatives at Bitfinex, a worsening job market in the United States might be a beneficial stimulus for the price of Bitcoin. Telling Cointelegraph, Kooner said:
"If the NFP report shows weaker-than-expected job growth, it could increase expectations for future rate cuts, which might bolster Bitcoin prices as investors seek alternative assets in anticipation of a looser monetary policy."
Bitcoin Price Reactions
Cointelegraph reports that in the twenty-four hours leading up to 1:04 pm UTC on July 5, the price of Bitcoin declined by more than 10.5%, reaching a low of $53,550, which was more than four months below its previous high.
Despite the fact that some traders are concerned that the bull cycle has come to an end, other analysts, such as the well-known analyst Rekt Capital, believe that the present drop is in line with other corrections that have occurred in Bitcoin.
TF Withdrawal Trends
Institutional investors' contributions to Bitcoin exchange-traded funds (ETFs) in the United States have likewise been slow.
With more than $315 million in cumulative net withdrawals so far this week, according to Dune data, the U.S. ETFs are on the verge of recording their third consecutive week of net negative inflows.
According to Kooner, if the weaker labor market can lead to predictions of a possible interest rate decrease, Bitcoin ETF flows could potentially see an upsurge. Additionally, he points out that there has been an absence of inflows and purchases made through "dip-buying" as of late.
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