Here’s How Friday’s US Jobs Report Could Impact the Bitcoin (BTC) Price
This Friday’s publication of the US jobs market report for March has the potential to significantly impact the Bitcoin market.
The non-farm payrolls numbers (the net change in jobs in the economy), which are anticipated to moderate to 239,000 from 311,000 a month ago, as well as indicators of labour market slack and wage growth, will be extensively scrutinised by traders.
The US labour market has, up until now at least, been in historically good condition during the past year or two, according to indicators of labour market slack like the unemployment rate.
At 3.6% in March, the jobless rate is anticipated to stay close to multi-decade lows.
While wage growth has admittedly slowed down in recent months, it is still moving forward at a rate substantially above the Fed’s target inflation rate of 2.0%, with more easing anticipated on Friday.
Key US Jobs Report Follows String of Weak US Data Releases
As much of the US labour market data released this week in the lead-up to Friday’s report has surprised to the downside, most analysts anticipate that Friday’s report will also be lower than anticipated.
The US economy’s job openings, a reliable indicator of labour demand, fell to a two-year low of under 10 million in February, according to JOLTs statistics released on Tuesday.
The estimate of the net change in employment in the US by payroll provider ADP was lower than expected on Wednesday, and on Thursday, yearly adjustments to the number of weekly unemployment claims filed in the US were higher.
This week’s dismal labour market data coincides with two ISM PMI surveys that were weaker than anticipated. The first one, released on Monday, revealed a more severe contraction in the US manufacturing sector than was anticipated.
The second, released on Wednesday, revealed that the US services sector’s expansion had almost completely stopped.
Recession and Fed Rate Cutting Cycle Bets Rise
All things considered, the weak numbers this week have contributed to concerns that 1) the economy is finally feeling the delayed consequences of the Fed’s tightening over the past 12 months, and a recession is probably on the way; and 2) the Fed will soon be cutting interest rates as a result.
The bank crisis that occurred in March and the consequent chilling effect that it is anticipated to have on lending during the next quarters increase the downside risks to the US economy and support a Fed rate-cutting cycle.
These broad trends have recently had a significant impact on the US dollar and US yields and have been quite supportive of the price of bitcoin.
BTC/USD has been fluctuating horizontally near $28,000 for the last three weeks, but it is still up roughly 70% for the year and a startling 43% from its lows under $20,000 from last month.
The US jobs report on Friday will be analysed in light of how it changes these macro storylines; data that indicates a deteriorating US labour market will support Fed rate cuts to avert a potential recession.
On the other hand, better-than-anticipated statistics would allay some fears about a recession and prompt a reassessment of Fed tightening bets.
For what it’s worth, the Fed Watch Tool from the CME indicates that US money markets presently give a near-50/50 chance that the Fed will raise interest rates at its meeting next month, with this hike (if it were to happen) being considered the final of the cycle.
Also, according to the money markets, there is a roughly 50% likelihood that by July, the Fed will have dropped interest rates by at least 25 basis points from where they currently stand (between 4.75 and 5.0%) before bringing them down to about 4.0% by year’s end.
How Friday’s Data Will Impact Crypto
Given that American markets will be closed on Good Friday, the publishing of the US jobs report is unusual.
Cryptocurrency typically follows the movement of the US dollar, US rates, and US stock market.
The likes of Bitcoin won’t, however, have access to those asset classes to track and trade against.
The holiday will result in low liquidity, which will make trading conditions extremely choppy and unpredictable.
The market reaction playbook is probably going to resemble something like this:
- Weaker crypto due to a stronger-than-expected jobs report (as the US dollar, yields and Fed tightening bets rise).
- Market response that is neutral or in line with expectations.
- Stronger crypto due to weaker-than-expected jobs report (as the US dollar, yields and Fed tightening bets fall).
As mentioned in prior articles, Bitcoin is technically highly ready for a breakout after forming a pennant structure.
A higher jobs data might act as the impetus for Bitcoin to decline once more, possibly approaching support that has since turned into resistance in the $26,500 range or even support near $25,500.
A weaker-than-expected report may cause Bitcoin to rise past its most recent highs, which were in the mid-$29,000 range, above $30,000, and then into the crucial $32,500–$33,000 resistance zone.
Naturally, there is always a chance that a poor report could harm Bitcoin as people fear an impending US recession, and a good report will benefit Bitcoin as people’s recession concerns subside.
Longer term, however, economic growth is less significant for Bitcoin than monetary conditions and Fed policy.
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