Bitcoin (BTC), the world’s first and largest cryptocurrency by market capitalization, has experienced significant price fluctuations following the release of a robust US jobs report for September. The report revealed that the US economy added 336,000 jobs, exceeding economists’ expectations. This data highlighted the ongoing strength of the US economy, which has implications for the Federal Reserve’s interest rate policies.
The strong jobs report has prompted market speculation about two potential outcomes: first, an increase in interest rates by the Federal Reserve, and second, the likelihood of higher interest rates being maintained for a longer period. As a result, US bond yields surged, causing a temporary dip in crypto prices. Bitcoin, for instance, dropped from the $27,700s to as low as $27,200 immediately following the data release.
The rise in yields on risk-free assets such as US government bonds reduces the appeal of riskier and non-yielding assets like Bitcoin. However, as US yields have subsequently retreated, Bitcoin and the overall crypto market have notably recovered from their intraday lows. BTC is now trading near session highs, with a nearly 3% increase from earlier lows, aiming to surpass the $28,000 mark.
The Factors Influencing the Market’s Reversal
The reasons behind the market’s reversal are speculative, but several factors could be influencing investors’ decisions:
- The US jobs report revealed mixed results. While the unemployment rate unexpectedly increased to 3.8% from 3.7%, the monthly wage gains were slightly slower than expected. Some investors may view these figures as an indication that the US jobs market is not as strong as initially presumed, leading to an overreaction and subsequent reversal in the market.
- Investors may also be purchasing Bitcoin as a hedge against potential over-tightening by the Federal Reserve. The strong jobs numbers could result in the Fed maintaining excessively high interest rates for an extended period, which may negatively impact the economy’s long-term outlook. Bitcoin, perceived as a safe-haven asset, could attract buyers seeking protection against this scenario.
While the exact reasons for the market’s reversal remain uncertain, Bitcoin’s recent price action is noteworthy. Despite the surge in US yields to multi-decade highs, Bitcoin has managed to hold above and rebound from the $25,000s in recent weeks. This resilience suggests a growing comfort level with higher interest rates within the cryptocurrency.
The Short-Term Uptrend and Key Resistance Levels
Bitcoin is currently in a short-term uptrend, but its continuation hinges on overcoming a crucial resistance area. The cryptocurrency’s 200-day moving average (200DMA) lies just above $28,000, and $28,500 represents a significant resistance-turned-support-turned-resistance zone.
If Bitcoin successfully breaks above this key area, a retest of $30,000 becomes highly likely. However, surpassing this psychological threshold and reaching new yearly highs above $31,800 in the near future is challenging due to prevailing macro headwinds. That said, the narrative could shift away from macro factors as we approach 2024, marked by potential milestones such as the likely approval of spot Bitcoin ETFs in the US, which would accelerate institutional adoption, and the halving, historically a bullish event.
The outlook for 2024 remains robust, a sentiment shared by Bitcoin options traders. Data from The Block suggests that the 25% delta skew of Bitcoin options expiring in 180 days remains strongly positive at around 5, indicating that investors are willing to pay a premium for options that offer upside potential in Bitcoin’s price.
