Bitcoin prices plunged 2% on US jobs data as the Fed’s rate hike heats up
Bitcoin (BTC) saw a quick test of $27,000 on Oct. 6 Wall Street's bearish opening on U.S. employment data markets.
Analysis: Jobs data ‘not what the Fed wants to see'
Data from Cointelegraph Markets Pro and TradingView followed BTC's price action as the largest cryptocurrency lost 2.1% in an hour.
The subsequent rebound saw bulls recover those losses, with $27,700 – the area of interest prior to the data release – now back in focus.
The volatility came as US non-farm payrolls (NFP) nearly doubled to 336,000 from 170,000 in September.
With the labor market showing continued interest rate hikes by the Federal Reserve, the implications of the September outcome were seen as bleak for risk assets – including crypto.
“Good news is bad news because the FED wants the labor market to lose strength,” wrote popular trader CrypNuevo in a response on X (formerly Twitter).
“Given this increase, I am surprised that the unemployment rate remains the same (3.8%). So I believe that the data will be revised and will be much lower.”
Like others, CrypNuevo saw the possibility of another rate hike from the Fed at the Federal Open Market Committee meeting in November.
“The market perceives this data as a new risk for a possible 25bsp hike on November 1 (25% yesterday versus 31.3% chance given today),” he continued, citing data from CME Group's FedWatch Tool.
“We have CPI next week on Thursday and hopefully that will give us a clearer picture.”
The CPI, or Consumer Price Index, forms one of the key inflation indicators for Fed policy.
Further, financial opinion source Kobayashi's letter suggested that there is now pressure on both markets and the Fed.
“Furthermore, the Fed's pause was previously expected until June 2024, now the pause is expected until July 2024,” he reported, citing market forecasts for rate adjustments.
“Market futures fell 400+ points after the report. This is not what the federation wants to see.
Bitcoin open interest drains
Looking at Bitcoin's unique reaction, popular trader Skew revealed positions and derivatives on the NFP publication.
Related: Bitcoin still beating US dollar with ‘eggflation' – Fed data
After a jump in the NFP, a sold and sold position
Shorts chase a little more here
Maybe for morning PvP https://t.co/7faaQLfur5
— Skew Δ (@52kskew) October 6, 2023
“The likelihood of a hike on Nov. 1 will change to a hike but still unlikely,” read an additional forecast for Fed action.
“You need to look at FED tone and pitch first to weigh the odds.”
Updating analysis earlier on October 6, meanwhile, fellow trader Daan Crypto Trades pointed out that Bitcoin open interest (OI) is decreasing.
In the past, this has hit the levels that started the reversal and bearish volatility earlier.
Another $600m loss from yesterday's high was lost in open interest. Getting back to average and ‘healthy' levels,” he summarized.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
