- Bitcoin and major altcoins like XRP, Pepe, and VeChain dropped sharply following weak U.S. economic data, including shrinking GDP and lower job growth.
- Investors fear a looming recession, but hopes remain that potential Fed rate cuts could eventually boost crypto markets.
The cryptocurrency market took a significant hit, with Bitcoin and top altcoins like XRP, Pepe, and VeChain plunging sharply in response to disappointing U.S. economic data. Bitcoin dipped below $94,000, retreating from its recent high of $96,000, while altcoins experienced even steeper declines. XRP fell by 4.34%, VeChain by 4.71%, and meme token Pepe dropped 3.28%.
Weak U.S. Data Sparks Market-Wide Selloff
The downturn in crypto prices mirrors a broader risk-off sentiment sweeping across financial markets. The total crypto market capitalization shrank by 3.6% to $3.03 billion, while U.S. stock indices also slipped. The Dow Jones lost about 150 points, and the tech-focused Nasdaq 100 shed roughly 170 points.
This selloff was triggered by several troubling U.S. economic indicators. Private sector job growth came in far below expectations, with only 62,000 jobs added in April versus an anticipated 114,000. Even more concerning, U.S. GDP data revealed that the economy contracted by 0.3% in Q1, a sharp reversal from the 2.4% growth seen in the previous quarter.
Meanwhile, inflation continues to hover above the Federal Reserve’s 2.0% target. The Personal Consumption Expenditure (PCE) index slowed slightly to 2.3% in March, but remained higher than the expected 2.2%. Adding to investor anxiety, consumer confidence has fallen to multi-year lows, according to the Conference Board.
Political Uncertainty Adds Fuel to the Fire
Markets were also rattled by former President Trump’s renewed commitment to imposing tariffs on a broad range of imports. In a recent social media post, he emphasized that tariffs would be reinstated under his leadership — a stance that investors fear could further strain the U.S. economy and worsen inflationary pressures.
A Glimmer of Hope for Crypto
Despite the bleak outlook, there may be a silver lining for crypto investors. A weakening U.S. economy could prompt the Federal Reserve to cut interest rates to stimulate growth. Lower rates have historically benefited cryptocurrencies, as seen during the 2020 pandemic, when the Fed’s ultra-loose monetary policy helped fuel a massive crypto rally.
For now, however, Bitcoin and its altcoin counterparts remain under pressure, caught between macroeconomic headwinds and growing fears of a looming recession.
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