As the sell-off in Bitcoin (BTC) intensifies, one analyst is looking towards Friday’s U.S. jobs report to potentially curb the decline.
Bitcoin, the foremost cryptocurrency by market value, dropped below $54,000 early on Friday following reports that the defunct exchange Mt. Gox had moved BTC amounting to $2.6 billion for creditor repayments. Subsequently, Mt. Gox announced it had commenced repayments to customers, prompting a muted response from Bitcoin.
As of the latest update, the cryptocurrency has declined over 13% for the week, marking its most substantial weekly percentage drop since the collapse of FTX in November 2022, according to data from CoinDesk and TradingView.
The U.S. Bureau of Labor Statistics is scheduled to release the nonfarm payrolls (NFP) report for June at 12:30 UTC (08:00 UTC) on Friday. Economists surveyed by FactSet anticipate the NFP data will show an addition of 190,000 jobs in June, a notable slowdown from May’s 272,000 additions, while maintaining the unemployment rate at 4%.
In potentially encouraging news regarding inflation, average hourly earnings growth is forecasted to decelerate to 0.3% in June from 0.4% in May, resulting in a year-on-year increase of 3.9%, down from May’s 4.1%.
Macro traders, who have been cautiously entering the BTC market since 2020, are primarily concerned with the timing and number of Federal Reserve rate cuts. Following last week’s soft U.S. PCE inflation data, traders have nearly priced in two rate cuts for this year, according to CME’s FedWatch tool.
Jag Kooner, head of derivatives at the crypto exchange Bitfinex, suggests that expectations favoring dovish policies and pro-risk assets could strengthen further if Friday’s jobs figure indicates weaker-than-expected job growth.
“If the NFP report shows weaker-than-expected job growth, it could increase expectations for future rate cuts, which might bolster bitcoin prices as investors seek alternative assets in anticipation of a looser monetary policy,” Kooner explained in an email to CoinDesk.
However, Kooner cautioned that the extent of inflows into spot bitcoin ETFs listed in the U.S., favored by macro traders and institutions, will depend significantly on broader market sentiment and the demand for risk assets.
“Currently, we’ve seen quite underwhelming flows and a lack of ‘dip-buying,'” Kooner noted. “If the job market appears more resilient, bitcoin might face downward pressure as the likelihood of near-term rate cuts diminishes.”
In conclusion, Friday’s U.S. jobs report holds potential implications for Bitcoin’s trajectory amid ongoing market dynamics and Federal Reserve policy expectations.
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