The cryptocurrency market’s volatility persists as all attention shifts to today’s US employment report, which could potentially mitigate Bitcoin’s ongoing decline.
Bitcoin Registers Largest Weekly Drop Since FTX Crash
Bitcoin, the leading cryptocurrency by market capitalization, dipped below $54,000 today, marking its most significant weekly decline since the November 2022 FTX crash.
The recent downturn, where Bitcoin plummeted over 13% this week, was partly influenced by news from the now-defunct Mt. Gox exchange. Reports indicated that $2.6 billion worth of BTC was being moved for alleged creditor reimbursements.
Mt. Gox subsequently confirmed the commencement of refunds to its clients, prompting a relatively muted response from Bitcoin.
US Nonfarm Payrolls Data Awaited
The US Bureau of Labor Statistics is set to release its June nonfarm payrolls (NFP) report today at 3:30 p.m. Analysts surveyed by FactSet anticipate a job addition of 190,000 for June. Despite a significant slowdown from May’s 272,000 additions, this figure is expected to maintain the unemployment rate at 4%.
Inflation Outlook and Federal Reserve Actions
On the inflation front, there’s potentially positive news as average hourly earnings growth decelerated to 0.3% in June from 0.4% in May, resulting in a year-on-year increase of 3.9% compared to 4.1% in May. This development could impact future Federal Reserve interest rate decisions.
Macro investors, increasingly involved in Bitcoin since 2020, are closely monitoring the Federal Reserve’s timing and frequency of interest rate adjustments. Following recent soft US PCE inflation data, investors are now pricing in nearly two rate cuts this year according to CME’s FedWatch tool.
If today’s employment report reveals weaker growth than anticipated, expectations for further interest rate cuts could strengthen.
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