Bitcoin’s Price Recovery Faces Nonfarm Payrolls Test

As a crypto investor keeping an eye on economic indicators, I eagerly anticipate the U.S. Labor Department’s nonfarm payrolls report scheduled for release at 12:30 UTC. The world’s largest economy is predicted to have added around 243,000 jobs last month based on recent trends and data from trusted sources like Reuters. This comes after the impressive addition of 303,000 jobs in March.

At the moment of reporting, Bitcoin, the most valuable cryptocurrency, was hovering around $59,000, marking a 4% increase from its previous low of $56,500 as per CoinDesk’s data. The US Dollar Index, measuring the dollar’s strength against six major currencies, has dipped by approximately 1% to reach 105.20 following Jerome Powell’s statement during the Federal Open Markets Committee press conference, in which he indicated that a rate hike was not imminent.

As an analyst, I can assert that the upcoming jobs report holds significant weight for financial markets. It may challenge bullish assumptions regarding Federal Reserve interest rate reductions, based on ING’s perspective.

ING’s strategists expressed in a client note that the upcoming payrolls report with a forecasted 210,000 increase is unlikely to disrupt the ongoing bearish trend of the US dollar. This is because markets may have already factored in a rate cut in September and therefore, short-term USD rates are expected to remain suppressed.

The Commodity Futures Trading Commission (CFTC) figures indicate that net-speculative positions on the U.S. dollar versus the G10 currencies accounted for 24% of total open interest – a level not seen since June 2019. This implies that there is a considerable potential for a significant long squeeze in the dollar if US data weakens over the next few weeks.

A persisting weak dollar might be beneficial for risky assets such as bitcoin. Typically, the value of bitcoin and the US dollar move inversely, meaning that when the dollar weakens, bitcoin tends to strengthen. The greenback’s influence on global liquidity is a significant factor in this correlation.