Bitcoin Price Surges Above $60,000 as US NFP Data Falls Short of Expectations – Here’s the Future Direction of BTC
The price of Bitcoin (BTC) has skyrocketed back above the $61,000 range following a disappointing US labor market report. The report has raised hopes that the Federal Reserve will implement multiple interest rate cuts before the end of 2024.
In April, the US economy added 175,000 jobs, which fell below the Wall Street consensus of a 240,000 job increase. Additionally, the unemployment rate rose to 3.9%, exceeding the expected 3.8%.
According to the CME, the probability of the Federal Reserve implementing more than one interest rate cut before the end of 2024 has increased to around 62% from 50% just one day ago. This has led traders to increase their rate cut bets for 2024, putting pressure on US yields and the US dollar.
The DXY has dropped below 105 for the first time since April 10th. Meanwhile, US 10-year yields have fallen to 4.5% from above 4.7% last week, and the 2-year yield is currently at 4.8%, down from above 5% three days ago.
These easing financial conditions have contributed to the S&P 500 reaching its highest level in over two weeks, surpassing 5,100 points. As a result, the improved macro backdrop has injected bullish momentum back into the cryptocurrency market.
It remains to be seen whether the Bitcoin price can break free from its recent downward trend. To confirm a breakout, the price would need to surpass the $64,000 resistance level.
The question now is where the Bitcoin price is headed next. The softer-than-expected US jobs data triggered a bullish reaction in both traditional financial markets and Bitcoin. Investors seem to believe that the rise in inflationary pressures witnessed in Q1 2024 will only be temporary.
However, it is risky to assume this based solely on one jobs report that wasn’t even particularly weak. The Federal Reserve has emphasized that it will wait for more progress on inflation before implementing interest rate cuts.
Markets may be getting ahead of themselves by betting that a slightly softer-than-expected inflation report indicates a new trend of labor market weakness that will bring down inflation and allow the Federal Reserve to cut rates faster this year.
If markets are indeed getting ahead of themselves, the Bitcoin price could be at risk of a correction. Bitcoin traders should keep in mind that spot Bitcoin ETFs have recently experienced outflows.
Furthermore, historical data shows that post-halving rallies typically don’t start until 4-6 months after the halving event. Thus, the short-term outlook for Bitcoin is likely to involve consolidation below the all-time highs reached in March.
There is significant resistance in the mid-$63,000 range, which corresponds to the top of the current downward trend channel. If Bitcoin fails to break above this level, it is likely to continue dropping towards the $53,000 support level.
However, a retest of this support level could present an attractive opportunity for bulls to enter the market. A drop to the low $50,000s would mark a 30% pullback from the March highs, which is consistent with previous bullish cycles.
Long-term fundamentals for Bitcoin remain highly positive. It’s not a question of if the Federal Reserve will start cutting interest rates, but rather how soon. When rate cuts do occur, it will provide a significant boost to the Bitcoin price.
Additionally, spot Bitcoin ETFs are expected to continue attracting substantial inflows in the long run. Most institutions have yet to enter the market and are currently conducting careful due diligence or remaining on the sidelines.
BlackRock, a major Wall Street firm, is playing a crucial role in educating its clients about the benefits of investing in Bitcoin.
Overall, while the next major Bitcoin rally may not happen until later this year, now could be an excellent time for investors to regularly invest in the asset through dollar-cost averaging (DCA) strategies.
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Disclaimer: Cryptocurrency is a high-risk asset class. This article is for informational purposes only and does not constitute investment advice. You could potentially lose all of your capital.