The past week saw Bitcoin and the cryptocurrency market under a bullish banner. The main digital asset managed to recover above the $27.5k level, and the cryptocurrency market capitalization grew to $1.1 trillion. Market sentiments also began to shift in a positive direction, and macroeconomic data gave reasons to doubt further tightening of the Federal Reserve's monetary policy.
However, the conclusion of the past trading week for Bitcoin and the cryptocurrency market ended on a minor note. This was largely due to the publication of discouraging labor market data, which altered investors' expectations regarding the Fed's short-term plans. The strengthening of the U.S. dollar and the rise in oil prices exacerbated investor expectations, and the release of inflation data could be the final blow to financial players' expectations.
U.S. Labor Market
At the end of the past week, Non-Farm Payrolls data were published, which showed a robust result despite bearish forecasts. Investors expected the figure to be 170,000, with data for September at around 187,000. Despite bearish expectations, the indicator reached 336,000, which in the current market cycle is perceived as negative news indicating a high level of U.S. economic stability.
According to BBG data, after the Non-Farms report, the markets began to incorporate a higher probability of a Fed rate hike at the November meeting. This also led to a negative reaction in financial instruments since the Non-Farms data strengthened the U.S. dollar's position and, consequently, put pressure on high-risk assets, including cryptocurrencies.
At the same time, there is an increase in unemployment in the United States, which stood at 3.8% in September, compared to a forecast of 3.7%. This could be a restraining factor for the Fed to raise the key rate. Meanwhile, the armed conflict in Israel has worsened the situation with oil, provoking further price increases due to the restrictive policies of major OPEC+ members. This, in turn, forces the United States to maintain a high level of production, increasing the number of jobs and directly impacting inflation in America.
The stock market also notes a decrease in trading activity and a worsening bearish sentiment. This is primarily due to the decline in the yield of the S&P 500 and the simultaneous achievement of the maximum 10-year government bond yields. These data again indicate the strength of the U.S. dollar and U.S. Treasuries amid the deepening crisis in the global economy.
BTC/USD Analysis
As of October 9th, Bitcoin is trading near the $27.5k level, with daily trading volumes around $8.2 billion. Trading activity in the cryptocurrency market has decreased due to the onset of the weekend and increased investor focus on the U.S. dollar and government bonds. There is also a strong buyer presence in the Bitcoin market, according to the stochastic oscillator on the 1D chart.
Furthermore, if we consider the local peak from July 13th as the beginning of a downward trend and draw Fibonacci retracement lines to the end of the downward trend at the $25k mark, it becomes clear that BTC has reached the 0.5 level. This could indicate the realization of upward potential for Bitcoin given the current trading activity in the market. Over the past seven days, the price has unsuccessfully retested the 0.5 Fibonacci level twice, and there is no reason to believe this trend will not lead to a reversal.
In addition, Santiment notes that wallets with balances ranging from 1 BTC to 10,000 BTC have resumed accumulating cryptocurrency. There is also a continued trend of increasing stablecoin volumes in the market, as well as profit-taking by short-term traders. However, overall market sentiment is positive, and there is confidence in further upward price movement above $28k.
Conclusion
Concerns are growing in the BTC market due to the potential for a key rate hike amid a strong labor market and an oil crisis. Therefore, the markets will closely watch the release of inflation data on Thursday. This event will be crucial in shaping price trends for BTC in the coming weeks. As for short-term plans, expect a retest of the $28k level in the event of successful defense of the $27k level.
