US Nonfarm Payrolls Spark Little Hope as Bitcoin Sees Worst Weekly Decline since FTX Collapse

As a seasoned crypto investor who has been through multiple market downturns and recoveries, I’m keeping a close eye on the upcoming US nonfarm payrolls (NFP) report. The latest dip in Bitcoin’s price, triggered by Mt. Gox’s customer repayment announcement, is a reminder of how interconnected the traditional financial markets are to the crypto market.

Bitcoin (BTC) has witnessed its most significant drop in a week since FTX’s collapse in November 2022. Nevertheless, investors remain optimistic that the approaching US Nonfarm Payrolls (NFP) report may help alleviate some of the current market anxiety.

As a crypto investor, I’ve noticed that the leading cryptocurrency by market capitalization dipped below the $54,000 threshold early on a Friday morning, representing a 13% decrease in value over the past week. This downturn can be attributed to news about the defunct exchange Mt. Gox transferring approximately $2.6 billion worth of Bitcoin for creditor compensation. After Mt. Gox announced the initiation of these repayments, Bitcoin has continued to trade in the red zone.

On TradingView, Bitcoin experienced a weekly drop of 13%, marking its most substantial percentage decrease in close to two years.

NFP Report Expected to Impact Bitcoin

As an analyst, I’m eagerly anticipating the upcoming release of the Non-Farm Payroll (NFP) report by the US Bureau of Labor Statistics this Friday at 12:30 UTC (08:00 EDT). According to the latest forecasts from FactSet, economists predict that approximately 190,000 new jobs were added in June. Although this number represents a decrease compared to May’s robust job growth of 272,000, it is still impressive enough to maintain the US unemployment rate at its current level of 4%.

As a crypto investor, I’m keeping a close eye on the economic news, and there are some encouraging signs coming from the inflation front. The forecasted decrease in average hourly earnings growth from 0.4% in May to 0.3% in June may indicate that inflation is beginning to ease. This would translate to a year-on-year increase of 3.9%, down from May’s 4.1%. Essentially, this trend could potentially impact the Federal Reserve’s policy decisions, making it an important development for the broader economic landscape.

As the head of derivatives at Bitfinex, I, Jag Kooner, hold a strong belief that this Friday’s Non-Farm Payroll (NFP) report is poised to significantly influence market trends.

If the NFP report reveals fewer jobs added than anticipated, it may boost speculation about upcoming interest rate reductions. Such expectations could lead investors to buy Bitcoin as a potential hedge against this more accommodative monetary policy.

Kooner pointed out in his discourse that currently, large-scale investors and macro traders are showing preference for US-listed Spot Bitcoin Exchange-Traded Funds (ETFs). Consequently, significant inflows have been recorded by these funds since their launch.

He also pointed out that these inflows could pick up pace if investors think economic instability may lead the Federal Reserve to reduce interest rates in the future. However, the size of these inflows will depend on investors’ risk tolerance levels.

What Next?

Bitcoin is experiencing its most significant weekly decline in some time. Yet, investors are keeping a close watch on the upcoming NFP report. A disappointing jobs report could alleviate market anxieties and potentially bring relief to BTC prices. Conversely, a strong labor market might exacerbate Bitcoin’s current downturn, as expectations for immediate interest rate cuts decrease.

As a crypto investor, I’m eagerly anticipating this week’s data release, which could bring either relief or uncertainty to Bitcoin’s current downward trend.

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2024-07-05 15:03