Blockchain
US Nonfarm Payrolls Are Under Watch as Bitcoin Heads to Biggest Weekly Loss Since FTX Crash
While the bitcoin sell-off (BTC) becomes choppy, one analyst is pinning his hopes on Friday’s U.S. jobs report to ease the slide.
Bitcoin, the leading cryptocurrency by market value, dropped below $54,000 Friday morning, amid reports that the defunct Mt. Gox exchange had moved $2.6 billion worth of BTC, presumably for creditor repayments. Later, Mt. Gox said that has started refunds to its customerswhich led to a moderate reaction from Bitcoin.
At the time of writing, the cryptocurrency is down more than 13% on the week, the biggest single-week percentage drop since FTX’s collapse in November 2022, according to data from CoinDesk and TradingView.
The U.S. Bureau of Labor Statistics will release its June Nonfarm Payrolls (NFP) report on Friday at 12:30 UTC (08:00 UTC). According to the consensus forecast of economists Reviewed by FactSetNFP data is expected to show the economy added 190,000 jobs in June, a significant moderation from May’s 272,000 new jobs, while holding the unemployment rate steady at 4%.
In potentially positive news for the inflation rate, average hourly earnings growth is forecast to slow to 0.3% in June from 0.4% in May, representing a 3.9% increase on an annual basis, down from 4.1% in May.
The main concerns for macro traders, who have been diving into the BTC market since 2020, are the timing and number of Fed rate cuts. Since last Friday, weak US PCE inflation data has almost priced in two rate cuts for this year, according to CME’s FedWatch tool.
According to Jag Kooner, head of derivatives at cryptocurrency exchange Bitfinex, so-called dovish and risk-on expectations will further strengthen if Friday’s employment data shows weaker-than-expected job growth.
“If the NFP report shows weaker-than-expected job growth, it could raise expectations of future rate cuts, which could support bitcoin prices as investors seek alternative assets in anticipation of looser monetary policy,” Kooner told CoinDesk in an email.
Kooner said inflows into U.S.-listed spot bitcoin ETFs, favored by macro traders and institutions, could accelerate if “market participants believe that economic uncertainty will push the Fed toward eventual rate cuts.”
Kooner, however, cautioned that the size of inflows will be influenced by overall market sentiment and demand for risky assets in general.
“However, significant inflows would depend on broader market sentiment and risk appetite. Currently, however, we have recently seen rather disappointing inflows and a lack of ‘buying on the dip’,” Kooner said. “If the labor market looks more resilient, bitcoin could come under downward pressure as the likelihood of near-term rate cuts diminishes.”