Key Points
- Goldman Sachs warns that US jobs data may be overstating economic weakness.
- The data’s impact could cause volatility in the Bitcoin market, prompting caution for Bitcoin bears.
The global financial and crypto markets are keenly awaiting the opening of the US market on Wednesday, August 21, particularly the FOMC meeting. A note from the Goldman Sachs Economics Research team to clients suggests that the US jobs data might not be accurate.
The US Bureau of Labor Statistics (BLS) is slated to release a preliminary estimate of the benchmark estimate of the monthly nonfarm payrolls (jobs report) for the period of April 2023 to March 2024 later today. This report typically comes out in the summer of every fall.
Market Observations and Predictions
Market watchers believe that the BLS report will indicate slower job growth than previous estimates for the year to March. In a recent market update, SignalPlus, a tech company aiming to democratize crypto options, stated that revised job growth figures are due to be received by the Federal Reserve on Wednesday, which may show weaker job growth than previously estimated.
Morgan Stanley, a banking giant, also anticipates a downward revision in payroll data, with a decrease of 600,000 jobs from current reports. This significant revision could reignite concerns about a recession, prompting a shift from risk assets, including cryptocurrencies, as investors look for safer alternatives.
The Goldman Sachs team is also forecasting a downward revision in nonfarm payroll growth, which averaged 250,000 jobs per month between April 2023 and March 2024. The upcoming figure may reduce this revision to 165,000-200,000 jobs per month. However, Goldman Sachs suggests that this part of the revision could be incorrect, with the real rate of employment growth during that period estimated to be closer to 200,000-240,000 jobs per month.
Implications for Bitcoin Bears
The release of these macro indicators could cause short-term volatility in the Bitcoin price. Bitcoin bears need to tread carefully. A recent report from K33 Research highlights the potential for a Bitcoin Short squeeze, which could trigger sharp rallies in the largest crypto asset.
K33 Research analysts are using Bitcoin derivatives data such as the BTC funding rate for perpetual futures to predict bullish or bearish momentum. They noted that as of August 20, the seven-day average annualized funding rate has dropped to its lowest since March 2023, at minus 2.5%. They further explained that negative average perpetual swap funding rates over the past week, coupled with a sharp increase in open interest, suggest aggressive shorting, creating a setup ripe for a short squeeze.
K33 Research also observed that notional open interest in the perpetual market has surged by 29,000 Bitcoins over the last week. This rapid increase in open interest, combined with a negative funding rate, is a relatively rare occurrence.
