Bitcoin derivatives traders may push prices even higher in response to the disappointing US Non-Farm Payrolls report. The price of Bitcoin has already increased by 8% in May 2024, reaching over $61,000 for the first time in five days.
The sell-off of Bitcoin following the halving has slowed down since the US Federal Reserve announced a rate pause on Wednesday. This has created an opportunity for a mild price recovery. On Friday, the release of the US Bureau of Labor Statistics’ Non-Farm jobs data for April 2024 further boosted the market.
According to the latest data from the Bureau of Labor Statistics, the US labor market added 175,000 non-farm jobs in April 2024. This represents a decline of 140,000 jobs compared to the previous month and falls 28% short of the market’s consensus expectation of 243,000 jobs.
A decrease in Non-Farm jobs typically indicates a contracting economy, which often leads regulators to consider expansionary monetary policy adjustments. Strategic investors may interpret the underwhelming non-farm payrolls report as a sign of an imminent Fed rate cut.
The initial reaction from the crypto markets to the release of the NFP report on Friday supports this bullish stance. Within hours of the report, the price of Bitcoin surged by 4% from $59,000 to a daily peak of $61,770. This suggests that investors may have higher expectations of a rate cut in the second quarter.
Rate cuts usually increase the demand for risk assets like Bitcoin as it lowers the cost of debt and reduces returns on alternative fixed income assets and government bonds.
The next meeting of the Federal Reserve is scheduled for June 11-12. A contraction in the jobs market increases the likelihood of a rate cut to stimulate the economy and prevent a recession. This could lead to continued rapid purchases of BTC as investors seek to take advantage of the potential upside from the impending rate cut.
BTC bull traders have taken control of the derivatives markets following the lower-than-expected jobs data. Leveraged long trades have surged by nearly $700 million more than active short contracts. This indicates that the majority of Bitcoin traders are betting on the next US Fed rate announcement triggering further price increases.
If the BTC price breaks above the $62,425 mark, bears will face over $1.19 billion in liquidations. This could lead to a short-squeeze and an accelerated surge in the price of Bitcoin towards $70,000.
Historical accumulation trends also support an optimistic Bitcoin price forecast. The $61,770 – $63,583 range has been a significant accumulation zone for existing BTC holders in the past. Over 1.58 million addresses acquired 461,730 BTC at an average price of $62,575. This suggests that another wave of demand could quickly drive the recovery above $65,000.
However, if Bitcoin fails to surpass the resistance cluster in the near-term, prices could fall towards the $55,500 mark.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. The views expressed in this article are the author’s personal opinions and do not reflect those of The Crypto Basic. Readers are advised to conduct their own research before making any investment decisions. The Crypto Basic is not responsible for any financial losses incurred.
