Markets
US Nonfarm Payrolls Watched as Bitcoin Heads for Biggest Weekly Loss Since FTX Collapse
How to settle in bitcoin (BTC) spirals out of control, one analyst is pinning hopes on Friday’s U.S. jobs report to ease the decline.
Bitcoin, the leading cryptocurrency by market value, fell below $54,000 early Friday amid reports that the now-defunct Mt. Gox exchange moved $2.6 billion worth of BTC, allegedly for creditor payments. Mt. Gox later said that started refunds to its customerswhich led to a moderate reaction from bitcoin.
At the time of writing, the cryptocurrency is down more than 13% on the week, the most significant single-week percentage decline since the FTX collapse in November 2022, according to data from CoinDesk and TradingView.
The U.S. Bureau of Labor Statistics is scheduled to release its June nonfarm payrolls (NFP) report on Friday at 12:30 UTC (08:00 UTC), according to economists’ consensus forecast. researched by FactSetNFP data is expected to show the economy created 190,000 jobs in June, a significant moderation from May’s 272,000 additions, keeping the unemployment rate steady at 4%.
In potentially positive news on the inflation rate, average hourly earnings growth is expected to slow to 0.3% in June from 0.4% in May, equating to an annual increase of 3.9%, down from 4.1% in May.
The main concerns for macro traders, who have been testing the BTC market since 2020, are the timing and number of Fed rate cuts. Since last Friday’s weak US PCE inflation data, traders have nearly priced in two rate cuts for this year, according to CME’s FedWatch tool.
So-called moderate, risk-on expectations for assets are likely to strengthen further if Friday’s jobs numbers show weaker-than-expected growth, according to Jag Kooner, head of derivatives at cryptocurrency exchange Bitfinex.
“If the NFP report shows weaker-than-expected job growth, it could raise expectations for future rate cuts, which could boost bitcoin prices as investors seek alternative assets in anticipation of looser monetary policy,” Kooner told CoinDesk in an email.
Kooner explained that flows into US-listed spot bitcoin ETFs, favored by macro investors and institutions, could pick up pace if “market participants believe that economic uncertainty will lead the Fed to eventual rate cuts.”
Kooner, however, cautioned that the magnitude of flows will be impacted by overall market sentiment and demand for risk assets in general.
“However, significant inflows would depend on broader market sentiment and risk appetite. Currently, however, we have recently seen significantly lower-than-expected inflows and a lack of ‘buying on the dip,’” Kooner said. “If the labor market appears more resilient, bitcoin could face downward pressure as the likelihood of near-term rate cuts diminishes.”