Author: Danny Park, The Block; Translated by: Wuzhu, Golden Finance
BTC and Ethereum gave back some of their gains during Monday’s Asian session as the market focused on an upcoming speech by U.S. Federal Reserve Chairman Jerome Powell and U.S. labor market data expected on Friday.
Bitcoin prices fell 2.09% in the past 24 hours to around $64,403. On Friday, the world's largest cryptocurrency reached nearly $66,500, its highest level since late July, after the release of lower-than-expected personal consumption expenditures (PCE) data. China also announced a series of powerful stimulus measures to revive its economy.
“Bitcoin appears overbought on the daily chart, with prices retreating after reaching a high of $66,498 on Friday,” said Rachael Lucas, a cryptocurrency analyst at BTC Markets. “Momentum has faded since [last week].”
Lucas said ETH is also struggling to regain momentum, and after falling below its 50-day simple moving average last week, ETH lost its upward momentum. In the past 24 hours, the price of Ethereum fell 1.69% to $2,626.
Powell's speech and non-farm payrolls
Meanwhile, investors are focused on two key macroeconomic events this week - Federal Reserve Chairman Jerome Powell's speech to the National Association for Business Economics later today and the U.S. non-farm payrolls report on Friday.
Powell is expected to talk about the economic outlook and possibly provide insights into the Fed’s monetary policy. Lucas said: “Powell’s comments, especially on inflation and interest rates, tend to move markets, and cryptocurrencies are no exception. Any hawkish tone could further fuel risk aversion, leading to today’s decline.”
However, Augustine Fan, director of insights at SOFA.org, said Powell was unlikely to make any market-moving comments. “Investors may be expecting more of the same as he did at the last FOMC meeting, especially since recent inflation data has been favorable to him since his last dovish Q&A.”
The U.S. Department of Labor will release its monthly nonfarm payrolls report this Friday, which provides a snapshot of the U.S. job market and overall economic strength. Although August data showed a weak U.S. labor market, BTC Markets’ Lucas said the market expects September data to improve. “Stronger-than-expected employment data could reinforce the Fed’s current interest rate policy, potentially benefiting risk assets such as Bitcoin and Ethereum,” Lucas said.
As far as cryptocurrency prices are concerned, the market is likely to remain bullish in the near term. “As crypto correlations with macro assets remain elevated, especially compared to the SPX, we believe the friendly macro backdrop will continue to be a strong driver of cryptocurrency prices in Q4,” Fan said. “In addition, with the Kamala camp paying lip service to crypto ‘support’ in their campaign rhetoric, we remain bullish on price action in the near term, and targeted bearish selling strategies may prove popular as investors shift into ‘buy the dip’ mode.”
