Bitcoin (BTC) experienced a sudden drop to $27,000 as the Wall Street opened on October 6. This was in response to the unpredicted United States employment data, which caused turbulence in the market. BTC lost 2.1% in a single hour but quickly rebounded to recover those losses. The area of interest before the data release, $27,700, became the focus once again.
The volatility in Bitcoin can be attributed to the U.S. non-farm payrolls (NFP) data, which showed a much higher number of jobs created in September than expected. The labor market’s resilience to the Federal Reserve’s anti-inflation measures, such as interest rate hikes, was seen as negative for risk assets, including cryptocurrencies. The implications of the September result were viewed as bad news for the Fed, as they want the labor market to weaken.
Many analysts, including CrypNuevo, believe that the data will be revised down and the unemployment rate will be much lower. However, the increasing likelihood of another rate hike from the Fed at the November meeting of the Federal Open Market Committee is concerning for the market. The chances of a rate hike in November went from 25% to 31.3% after the data release. The Consumer Price Index (CPI), which will be released next week, is expected to provide a clearer view of the situation.
The pressure is now on both the markets and the Fed itself. The Fed’s pause in rate hikes was expected to last until June 2024, but now it is projected to continue until July 2024. Market futures experienced a significant drop after the employment report, which is not what the Fed wanted to see.
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Bitcoin’s specific reaction to the employment data was observed by popular trader Skew. The data showed that both spot and derivatives traders exited their positions after the jump in NFP shorts. This indicates a shift in sentiment and uncertainty regarding the Fed’s actions.
Another observation is the decline in Bitcoin open interest (OI), which is a measure of the total value of outstanding derivative contracts. This decline in OI suggests a decrease in market participation and potentially less volatility in the future. This is seen as a positive development as it returns Bitcoin to more average and “healthy” levels.
It is important to note that this article does not provide investment advice or recommendations. Investing in Bitcoin or any other asset involves risk, and it is crucial for readers to conduct their own research before making any decisions.
In conclusion, the United States employment data caused a temporary drop in Bitcoin’s price, but the cryptocurrency quickly recovered. The implications of the data on the labor market and the possibility of a rate hike from the Fed have raised concerns among traders and investors. The decline in Bitcoin open interest suggests a return to more stable market conditions.
