When economic clouds loom, the 'safe haven' myth of cryptocurrencies shatters instantly—data doesn’t lie; the market only votes with its feet!
The industrial output data for May released by France today is like a bucket of cold water thrown on the market—both year-on-year and month-on-month figures declined across the board, with industrial output and manufacturing all falling short of expectations. For example, the actual month-on-month industrial output was -0.5%, while the expectation was a positive 0.3%.
As soon as this data came out, BTC and ETH immediately plunged. Think about it, they dropped by 3%-5% today, many people were confused: didn’t they say crypto is 'digital gold'? Why is it so cowardly?
Don't worry, I'll break it down for you in simple terms, combining the latest news and personal experience, guaranteed to make you understand in seconds.
Core reason: Economic data is too poor, triggering a global sell-off of risk assets.
France's data is no small matter—it represents the 'lying flat' of Europe's second-largest economy, with industrial output declining continuously, indicating fewer factory orders and weak consumer demand, which means the economy might be heading towards recession. This directly panics investors: if Europe is like this, how can global growth be good? Money, of course, has to run to safer places like the dollar or government bonds; who would keep high-risk altcoins!
Moreover, the latest news is adding fuel to the fire:
The Federal Reserve and the European Central Bank are 'hawkish': In the past two days, Fed officials have stated that inflation is not over and interest rates must rise, and the ECB has also hinted not to expect interest rate cuts. In a high-interest-rate environment, the cost of borrowing becomes expensive, and funds are withdrawn from high-volatility assets like crypto—BTC and ETH are the first to suffer because they are like tech stocks, getting hit hard as rates rise.
Market sentiment is exacerbated: Recently, the Middle East situation is tense + US stocks are retreating, and major institutions are reducing positions to avoid risk. The crypto market is not an independent kingdom—BTC and the S&P 500 now have a correlation coefficient as high as 0.7; when the A-shares fall, it falls too, not to mention hard evidence like the French data.
My personal opinion: Crypto is a 'slave to emotions' in the short term, but don’t panic; a sharp drop is an opportunity!
As someone who has been there, I have seen this 'data kill' too many times.
When Germany's industrial data collapsed in 2023, BTC plummeted by 10% in one day. I was shouting 'buy the dip' in the group, and a week later it rebounded by 20%. This time is similar: French data exposed Europe's soft underbelly, but crypto is looking at blockchain applications and halving cycles in the long run. A short-term drop is a good thing—it washes out leveraged retail investors and makes coins like ETH, which have ecosystems such as DeFi and NFTs, cheaper to enter.
Remember, the crypto market plays a psychological war: when the economy is poor, market makers take the opportunity to dump and accumulate. The worse the data, the stronger the expectation for policy intervention, and the rebound will be more intense. But don’t rush in; keep cash on hand for signals of a Fed pivot!
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