Crypto

As Stocks Rise Ahead of Payrolls Data, Bitcoin Is Confined to a Familiar Range

Bitcoin

The United States economy is expected to add 550,000 jobs in November, up from 531,000 in October, according to payrolls data.

Bitcoin is trading in a familiar range as traditional markets show increased risk appetite, with investors awaiting the release of the monthly jobs report in the United States of America.

At filing time, the BTC was trading near $57,000, extending a three-day consolidation in the $55,800 to $59,300 range.

European equities rose, following Wall Street’s overnight rally, which saw the S&P 500 index rise 1.4 percent. Gains were, however, modest at best, with COVID fears dominating the mood.

The United States economy is expected to add 550,000 jobs last month, up from 531,000 in October, according to nonfarm payrolls data set to be released at 13:30 UTC on Friday. According to FXStreet, the unemployment rate is predicted to drop to 4.5 percent from 4.6 percent, while average hourly earnings are expected to rise 0.4 percent month over month.

If the payrolls report backs speculations on a speedier normalization of monetary policy by the Federal Reserve, the dollar could resume its recent rally, putting negative pressure on BTC and asset prices in general (Fed).

In a blog post, ING analysts wrote, “Another 500,000+ increase in the headline figure, a fall in the unemployment rate, and an increase in hourly earnings should all keep short-dated U.S. rates supported on the belief that the Fed could leave super-loose policy more soon.”

“Any sharper-than-expected drop in the unemployment rate (3.8 percent has been suggested as a metric for full employment and the beginning of tightening) or sharper rise in average hourly earnings (e.g. more than 0.4 percent month-on-month) could drive the dollar higher today,” according to ING analysts.

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Fears of faster Fed rate hikes have gripped markets in recent weeks due to higher-than-expected inflation. On Tuesday, Fed Chair Jerome Powell dropped the term “temporary” from the discussion of inflation and suggested that the central bank would consider hastening the unwinding of asset purchases in December. According to the Financial Times, Cleveland Fed President Loretta Mester said on Thursday that the Omicron variety might exacerbate surging inflation in the United States by putting more strain on supply chains and increasing labor shortages.

Bitcoin’s bull run has slowed in recent weeks, allowing for a more than 15% drop from all-time highs.

The cryptocurrency is presently attempting to break out of a falling channel formed by trend lines connecting the highs of November 10 and 15 with the lows of November 6 and 19.

A weaker-than-expected payrolls result would cast doubt on the Fed’s capacity to accelerate its tapering, perhaps driving bitcoin, equities, and other risk assets higher. “Bitcoin’s correlation with the S&P 500 grew throughout the general market sell-off, reinforcing our notion that more knowledgeable investors are now viewing bitcoin as a risk-on asset rather than a safe-haven asset,” according to Arcane Research’s weekly note published Tuesday.

Stuck in the comfort zone

The cryptocurrency is now trading in the $55,000 to $60,000 support zone, according to Glassnode, and may witness resistance over $60,0000.

One of the largest realized value clusters exists in the bitcoin market right now. Glassnode tweeted that “about 2.208 million Bitcoin were last traded on-chain between $55,000 and $60,000.” “The following major cluster, between $60,000 and $63,000, may operate as resistance, while $50,000 and $42,000 provide support.”

The Author

Samuel Adeshina

Samuel is a financial reporter whose interests include blockchain, market, business, insurance, and Crypto to provide relevant information to all interested.