- Bitcoin’s price whipsawed after stronger-than-expected May U.S jobs report
- Market watchers can now shift focus to next Wednesday’s Fed meeting
Bitcoin [BTC] dropped below $71k on Friday, in the early hours of New York’s trading session, following a hotter-than-expected May U.S jobs report. In fact, within 24 hours of the same, the cryptocurrency also dropped below $70k on the charts.
May’s U.S jobs report revealed that 272k jobs were added in May, well above the expected 190k. However, unemployment rates hit 4% against the expected 3.9%.
Although this was great news to workers, it complicated the prospect of the Fed cutting interest rates in June’s meeting. The jobs report is one of the datasets the Fed uses to make decisions on its monetary policy.
A weaker one could increase the odds of rate cuts, but a stronger one, like May’s report, could tip the Fed to be hawkish.
Commenting on BTC’s wild reaction to Friday’s report, Scott Melker of ‘The Wolf of All Streets’ stated,
“Bitcoin drops $1000 in a matter of minutes because too many people have jobs. LOL. We live in the upside down. Strong jobs mean less chance of cuts, which means assets go down as a knee-jerk reaction.”
What’s next for Bitcoin?
All eyes will now shift to the Fed’s announcement next Wednesday (June 12). However, according to the CME Fed watch tool, 99% of interest rate traders expect these rates to remain unchanged.
Source: CME Group
As such, market watchers will be keen on Fed chair Jerome Powell’s press conference next Wednesday to learn whether the agency adopts a dovish or hawkish position.
Many industry analysts expected the U.S Jobs report to be a key stepping stone in shaping BTC’s next price direction. According to Quinn Thompson of crypto hedge fund Lekker Capital,
“The market needs conviction that Powell is going to cut in July. That could come from a weak jobs report Friday, weak CPI, and/or dovish Fed next Wednesday.”
Bullish expectations have been raised after the European Central Bank (ECB) and Bank of Canada (BOC) cut their interest rates, which could initiate global quantitative easing.
The latest U.S job report complicates that. However, according to Charles Edwards, founder of crypto hedge fund Capriole Investments, rate cuts were inevitable in the long run.
“Time will tell. But it for sure looks like unemployment has bottomed now, which suggests US liquidity will need to rise and rise soon. Rate cuts incoming.”
Source: Coinglass
In the meantime, there is still considerable liquidity above $72k, marked orange, which could act as a magnet for price action. However, Bitcoin’s sideways movement could extend until the Fed meeting next week.