Bitcoin Remains Range-Bound Ahead of Key U.S. Jobs Data
The FX and Crypto Markets Are Getting Ready to Burst: Non-Farm Payrolls Eyed
After dropping into the major S/R at $20,000, Bitcoin started to move at a snail’s pace, without any sense of direction; however, that’s about to change. Today the most important jobs data is due for release at 12:30 pm GMT: the Non-Farm Payrolls. The US Dollar is highly sensitive to the job market and of course, Bitcoin is highly sensitive to the US Dollar, so a breakout is almost imminent.
The employment report is expected to show that 295K new jobs were created by employers in August, which would be much lower than the previous 528K. During his Jackson Hole address, Fed Chair Jerome Powell highlighted the need to curb inflation even with the cost of harming the economy and bringing “some pain to households and businesses”.
A slower hiring pace would actually help the Fed’s war on inflation, although it would put a dent in the economy. Higher wages and a growing number of employed individuals contribute to higher inflation but on the other hand, unemployed people tend to spend less, which leads to lower retail sales and consumer spending in general.
Let’s see how the jobs report will affect Bitcoin and cryptocurrencies in general. If the NFP shows a higher than expected number, this would show the Fed that inflation is not going to slow down considerably, which may in turn lead to a higher rate hike in September (possibly a 75-bps increase).
On the other hand, fewer jobs may determine the Fed to add only 50 bps at their next meeting. An aggressive pace of the hikes (75-bps) would hurt Bitcoin due to its status as a risky asset. In times of tight monetary policy (high rates), risky assets tend to perform worse. Keep in mind that the jobs market is not the only measure used by the Fed to determine the pace of the rate hikes but it plays a big role.
Chart Analysis – BTC/USD
After several days spent on the bullish trend line, the pair moved below it but stopped at $20K support and is currently trading in a tight range, with a total lack of momentum. The price at the time of writing is $20,108 and it is likely to remain in a narrow range for the next few hours preceding the NFP release.
The pair is trading in the lower part of the Bollinger Bands and the Relative Strength Index touched its oversold level a few days back. This setup increases the possibility of a bullish move but the deciding factors will be the NFP, Average Hourly Earnings, and the Unemployment Rate.
The levels to watch are $17,592 as support and the recently broken trend line as resistance. These may serve as targets for the initial push triggered by the job data that’s coming up.
