Key Points
- Bitcoin (BTC) experiences its most significant weekly drop since the FTX collapse in November 2022.
- Market participants are hopeful that the upcoming US nonfarm payrolls (NFP) report could ease market tensions.
Bitcoin (BTC) is going through a significant downturn, marking its worst weekly drop since the FTX collapse in November 2022.
Yet, investors are hopeful that the forthcoming US nonfarm payrolls (NFP) report might bring some relief to the strained market.
Bitcoin’s Market Struggles
The leading cryptocurrency slipped below the $54,000 mark early Friday, losing over 13% of its value throughout the week. This slump has been attributed to reports that the defunct exchange Mt. Gox had transferred $2.6 billion worth of BTC to repay its creditors. Since Mt. Gox confirmed it has started customer repayments, Bitcoin has stayed in the red.
According to TradingView, this 13% weekly decline is Bitcoin’s largest single-week percentage drop in almost two years.
NFP Report and its Potential Impact
The US Bureau of Labour Statistics is scheduled to release the NFP report for June on Friday at 12:30 UTC (08:00 EDT). Economists surveyed by FactSet predict that the NFP data will show the economy added 190,000 jobs in June. Despite this being a significant decrease from May’s 272,000 job additions, the US managed to maintain the unemployment rate at 4%.
There are some positive indicators from the inflation side as well. The average hourly earnings growth is predicted to slow to 0.3% in June from 0.4% in May, translating to a 3.9% year-on-year increase, down from May’s 4.1%. This could imply that inflation is slowly easing up, which could potentially influence Federal Reserve policy decisions.
Jag Kooner, head of derivatives at the crypto exchange Bitfinex, believes that Friday’s NFP report could significantly influence the market. Kooner stated that if the NFP report reveals weaker-than-expected job growth, it could increase expectations for future rate cuts, which might boost Bitcoin prices as investors seek alternative assets in anticipation of a looser monetary policy.
Kooner explained that macro traders and institutions have shown interest in spot Bitcoin ETFs listed in the US, hence the substantial amount of inflow these funds have registered since their inception. These inflows could accelerate if market participants believe economic uncertainty will drive the Federal Reserve towards eventual rate cuts. However, he also cautioned that the extent of the inflows would be influenced by investors’ appetite for risk assets.
It’s clear that Bitcoin is currently experiencing its most significant weekly fall in recent memory. Still, all eyes are on the upcoming NFP report. A weaker-than-expected jobs figure could alleviate the current market apprehension, providing a glimmer of hope for BTC prices. Conversely, a resilient labor market might exacerbate Bitcoin’s current downward trend, as the prospect of immediate rate cuts becomes less likely.
The crypto market is anxiously awaiting Friday’s data release, with the hope that the report could stabilize or even reverse Bitcoin’s recent decline.
