Is there no chance of a rate cut in July? Crypto market falls in response

Crypto markets remained stable in early trading in the face of a strong non-farm payrolls report (NFP), but trended lower in the afternoon as traders looked to reduce risk exposure amid increased uncertainty about future interest rates.

Data released by the U.S. Department of Labor showed that non-farm payrolls (NFP) increased by 272,000 in May, exceeding economists' expectations of 182,000 and exceeding April's 165,000. Despite the increase in employment, the unemployment rate rose to 4.0% for the first time since January 2022, exceeding the expected 3.9%.

The rise in unemployment indicates that another rate hike is more likely, and the benchmark 10-year Treasury yield surged nearly 14 basis points to 4.43%. As of the close, major US indices fell, with the S&P, Dow and Nasdaq falling 0.11%, 0.22% and 0.23% respectively.

After the NFP report was released, Bitcoin surged to $72,000 before losing support at $71,500. A post-midday sell-off saw BTC fall to an intraday low of $68,300 before bargain hunters pushed it back above $69,100. At press time, Bitcoin is trading at $69,250, down 2.1% over a 24-hour period.

Altcoins Take a Hit

Altcoins took a beating in the afternoon as traders rushed out of the market ahead of next week’s CPI report, with most of the top 200 tokens by market cap falling on the day.

Among the gainers, meme coins cat in a dogs world (MEW) and Highstreet (HIGH) rose 26.5% and 17.8% respectively, and RSS3 (RSS3) rose 6.5%. BOOK OF MEME (BOME) led the declines, falling 15.8%, while Aveo (AVEO) fell 15.7% and Yield Guild Games (YGG) fell 13.7%.

The current overall market value of cryptocurrencies is $2.55 trillion, and Bitcoin’s market share is 53.7%.

JPMorgan Chase pushes back first Fed rate cut forecast to November from July

JPMorgan Chase & Co. economists pushed back their forecast for the Federal Reserve's first rate cut to November from July due to stronger-than-expected U.S. jobs data for May.

Previously, JPMorgan Chase was one of the few institutions that still predicted the Fed would cut interest rates in July. Michael Feroli, the bank's chief U.S. economist, currently expects the Fed to cut interest rates for the first time in November and to cut interest rates quarterly next year. After the release of the May non-farm data, Feroli said, "The possibility of a rate cut in July now seems slim. The household survey indicators are expected to be weaker in the three employment reports from now to September, but given the recent momentum in job growth, we think it may take five reports from now to November to show weakness to pass the rate cut test."

As one of the few major Wall Street banks that believed the Federal Reserve would cut interest rates next month the day before, Citigroup changed its view after the May non-farm payrolls data and pushed back its expectations to September.

Economists led by Andrew Hollenhorst's new forecast is for three rate cuts this year, in September, November and December. The previous forecast was for a 25 basis point cut at each meeting from July to December. As of this week, at least six other major Wall Street banks predict that the Fed will cut interest rates in September, and at least four believe it will cut interest rates in December.

Investors continue to focus on next week's U.S. CPI data for May and the Federal Reserve's monetary policy decision.

Short-term fluctuations, long-term upward trend

Data shows that BTC's open interest surged to an all-time high of $37.66 billion ahead of the NFP release. This growth is consistent with record inflows into spot Bitcoin ETFs and a bullish long-short ratio, reflecting positive market sentiment and expectations that Bitcoin will hit a record high in the coming weeks.

Analysts at Secure Digital Markets believe: "While frothy markets often signal an impending price correction, characterized by a leveraged speculative frenzy, perpetual futures tied to most cryptocurrency pairs have shown no such signs so far. The lack of speculative enthusiasm suggests that the recent breakout above $70,000 may be more durable than the March breakout."

Bitcoin’s four-year cycle is also a factor, as the cryptocurrency market has historically risen within a year of a Bitcoin halving, regardless of whether external forces try to halt gains.

“There seems to be consensus that the peak of the current cycle will come sometime in late 2025, when BTC will reach a high of $150,000,” Stratos founding partner Rennick Palley said in a note.

He added: “We expect continued strength in the altcoin market starting in the second half of 2024 and continuing into 2025, although not necessarily at the same breadth as in 2021. Hot concepts are likely to be memes, RWAs, AI, and modular blockchains, including Ethereum L2. We are also generally bullish on Solana and its ecosystem.”

BTC's new ATH will come in October 2025?

Igor Telyatnikov, co-founder and CEO of AlphaPoint, said: “Based on historical data and patterns from previous cycles, we predict that Bitcoin will hit a new all-time high (ATH) of $210,000 during this bull run.

Telyatnikov said the forecast “takes into account the cumulative effect of institutional adoption (ETFs saw net inflows of more than $15 billion this week for the first time since going live in January), technological progress (L2 provides scalability to the Bitcoin network), and regulatory clarity (FIT21 Act, Travel Rule, SEC ruling).”

As for how long the bull run will last, Telyatnikov noted that historical data “shows that each Bitcoin cycle tends to last longer than the previous one, with durations increasing to 1,290, 1,403, and 1,438 days, respectively, and that an ETF could impact the length of the current bull run.”

“Given this trend, we expect the current cycle to last approximately 1,500 days, extending to the end of 2025. Historical cycles show that prices typically rise within 6-18 months after the halving, and increasing market maturity and infrastructure improvements help extend each cycle.”

Based on various data points, Telyatnikov said they “forecast that the new ATH will be reached on October 11, 2025, which is 560 days after the halving on April 19, 2024.”

He noted: “This prediction is based on the pattern observed over the past three cycles, with peaks reached 357, 511, and 546 days after the halving. The slightly longer intervals between the halving and the peak in each cycle suggest a similar extension in duration for the current cycle. This timeline is consistent with a gradual maturation and stabilization of the market, influenced by growing institutional interest and adoption.”

As for what could prevent the market from rebounding and trigger the next bear market, Telyatnikov believes that “a global regulatory crackdown or adverse legislation could dampen investor enthusiasm and trigger a recession.”

Other possibilities include a severe economic recession or financial crisis that could cause investors to withdraw from riskier assets such as cryptocurrencies and move into safe assets; a major technological vulnerability or hacker attack that could severely affect market confidence and lead to a prolonged bear market; or excessive leverage and excessive speculation, if not corrected, could lead to a sharp market correction, resulting in a cryptocurrency winter similar to previous cycles.