Is Crypto Collapsing Again? Digital Coins Sink After Difficult Month
Key takeaways
- Crypto prices have struggled this week after market headwinds weighed down the digital assets
- Bitcoin has yet to consistently break free from the $27,000 mark for several weeks
- But the prices have recovered today after the debt ceiling deal was agreed and the U.S. jobs market came in hotter than expected
The crypto market has had a rough week, but it looks like the digital coins will be finishing stronger today after news of the debt ceiling deal being passed as law emerged and the markets’ attention focused on the U.S. jobs report. It could be the lift that Bitcoin and other cryptos need to rise again instead of floundering. Here’s the lowdown.
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What’s happened to crypto prices this week?
Bitcoin had been struggling this week after a month or so of prices stagnating at the $27,000 mark. It’s because of a mix of ongoing battles between crypto companies and the SEC, the Fed’s fight against sticky inflation and the broader economic environment that has weighed heavily on prices for coins like Bitcoin and Ethereum.
On Friday, the malaise was broken at the news of the debt ceiling deal passing through Congress without issue. Bitcoin was up 0.9%, while Ethereum rose by 1.6% to $1,886. Smaller cryptocurrencies also increased, including the infamous memecoin Dogecoin, which gained 0.8%.
At the time of writing, Bitcoin is sitting at $27,099 after the U.S. Labor Department delivered a hotter-than-expected U.S. jobs report for May. Talk about a rollercoaster.
What does it mean for investors?
This week’s drama with crypto prices is a reminder that this is a highly volatile market that’s sensitive to all kinds of headwinds. Whether it’s good news like Hong Kong opening itself up for business with crypto exchanges or lousy news like a crypto company getting sued, cryptocurrencies will likely drop and rise at the most minor things.
As a result, we could see further short-term dips or climbs for cryptos after a few key events. The first is the U.S. Treasury needs to fill its coffers again, which could drive down risky assets like crypto that are more sensitive to liquidity issues. Then there’s the Fed’s next interest rate decision, which honestly could go either way after today’s U.S. jobs report for May.
There’s also a psychological factor involved: the longer Bitcoin stays in the zone it’s floundered in, the longer it will take to break out of it. Should the price shoot up, we could see another crypto rally.
The bottom line
Crypto is always all over the place and this week has been no exception. The digital coins have struggled to break free from their malaise like much of the market, though today’s mini pump has given the market hope of a rally.
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