Bitcoin (BTC) quickly retested $27,000 at the Wall Street open on Oct. 6 as U.S. jobs data unnerved markets.
Analysis: Employment data 'not what the Fed wanted'
Data from Cointelegraph Markets Pro and TradingView followed BTC price action as the largest cryptocurrency dropped 2.1% in a single hourly candle.
The subsequent bounce allowed bulls to recover these losses, with $27,700 – an area of interest ahead of the data release – now back in focus.
The volatility came as U.S. nonfarm payrolls (NFP) jumped to nearly double the expected figure for September, at 336,000 versus 170,000.
The impact of the September results, which point to continued labor market resilience to the Federal Reserve’s anti-inflationary measures in the form of rate hikes, is seen as negative for risk assets, including cryptocurrencies.
“Good news is bad news because the Fed wants the labor market to lose strength,” popular trader CrypNuevo wrote in part of X’s response.
“Given this increase, I was surprised that the unemployment rate remained unchanged (3.8%). So I believe the data will be revised downwards and will be much lower.
Like others, CrypNuevo is focusing on the increasing likelihood of another rate hike by the Federal Reserve at the November Federal Open Market Committee (FOMC) meeting.
“The market interpreted these data as a renewed threat of a possible 25 basis point rate hike on November 1 (probability was 25% yesterday and 31.3% today),” he continued, citing data from the CME FedWatch Tool.
“We have CPI next Thursday which will hopefully give us a clearer view.
The CPI, or Consumer Price Index, is one of the key inflation indicators for the Federal Reserve's policy.
The financial commentary resource "Kobeisi Letter" shows that both the market and the Federal Reserve itself are now under pressure.
“In addition, the Fed, which previously expected a pause until June 2024, now expects a pause until July 2024,” it reported, referring to market forecasts for the rate adjustment.
“Market futures just dropped 400+ points after the report was released. This is not what the Fed wants to see.
Bitcoin open interest drains away
Looking at Bitcoin’s specific reaction, popular trader Skew shows spot and derivatives traders exiting on NFP.
Related: Bitcoin Still Outperforms the Dollar vs. “Egg Bloat” – Fed Data
Spot selling and perpetual gains surge after NFP rally Shorts chasing more here PvP for rest of morning likely https://t.co/7faaQLfur5
— Skew Δ (@52kskew) October 6, 2023
"The odds of a November 1 rate hike have shifted slightly, but remain unlikely," a further forecast of the Fed's move read.
“We need to look at the Fed’s tone and posture to weigh this possibility.
Meanwhile, trader Daan Crypto Trades updated his analysis from earlier in the day, highlighting the drop in Bitcoin open interest (OI).
This has previously reached levels that have sparked both upside and downside swings before.
“That’s another $600 million loss in open interest since yesterday’s high. Once again to more average and ‘healthy’ levels,” he concluded.
This article does not contain investment advice or recommendations. Every investment and trading action involves risk, and readers should conduct their own research when making a decision.
Author: Deepchain DCNews
Compiled by: Sister Shen
Twitter: DeepChain
Twitter：https://twitter.com/DeepChainUS
