The US jobs market report for March is due for release on Friday and it has the potential to really shake things up Bitcoin market.
Traders will closely watch non-farm payrolls data (the net change in jobs in the economy), which is expected to decline by 311,000 to 239,000 from a month earlier, as well as measures of sluggish labor market growth and wage growth .
Measures of labor market slack, such as the unemployment rate, suggest that the US labor market has been in historically good health so far, at least over the past year.
Unemployment rate seen near multi-decade low in March at 3.6%
Wage growth, meanwhile, continues to move at a pace well ahead of the Fed’s 2.0% inflation target, although it has acknowledged easing in recent months with further easing expected on Friday.
Key US jobs report follows string of weak US data releases
US labor market data released so far this week in the run-up to Friday’s report has generally surprised to the downside, and as a result, most analysts expect Friday’s report to come in weaker than expected.
JOLTS data On Tuesday, job openings in the US economy for February (a good proxy for labor demand) fell to a two-year low of less than 10 million.
Payroll company ADP estimates net change in employment Wednesday’s decline in the US and the number of annual revisions are surprising weekly jobless claims Made in America on Thursday saw an upward revision.
Weak labor market data came with two reports of weaker than expected ISM PMIs this week – the first was released on Monday, showing US manufacturing sector In deeper contractions than expected.
The second, out on Wednesday, showed an increase in US service area slowed to a near standstill.
Recession and Fed rate cut cycle stakes rise
All told, this week’s poor data fueled expectations that the delayed effects of 1) Fed is tightening The last 12 months have finally been felt across the economy and a recession is expected later this year and 2) Fed will cut interest rates soon As a result.
March’s bank crisis and its chilling effect on lending in the coming quarters have further amplified the downside risks facing the US economy, further strengthening the case for a Fed cut cycle.
These are the overarching themes that have had a huge impact on the US Dollar and US yields in recent weeks and have strongly supported it. Bitcoin worth.
Whereas B T c/USD has been trading sideways near $28,000 for the past three weeks, staying in the 70% zone for the year and up an astonishing 43% from last month’s low below $20,000.
Friday’s US jobs data will be viewed through the lens of how it affects these macro narratives — data that shows a weak US labor market will strengthen the case for Fed cuts to stave off a suspected impending recession.
On the other hand, stronger-than-expected data could ease some recession concerns and lead to a rebuilding of the Fed’s tighter bets.
for what it’s worth CME’s Fed Watch ToolUS currency markets currently offer about a 50/50 chance that the Fed will hike interest rates at its meeting next month, with this hike (if it were to go ahead) seen as the last of the cycle.
Money markets also give a roughly 50% chance that the Fed will cut interest rates at least 25 bps below their current levels (4.75-5.0%) by July, taking interest rates to around 4.0% before they expire. Will go Year.
How Friday’s Data Will Affect Crypto
This is an unusual US jobs report, given that US markets will be closed for the Good Friday holiday.
Crypto generally takes its cues from the US dollar, US yields and the reaction in the US stock market.
but like Bitcoin They will not be an asset class to monitor and stop trading.
Due to the holiday, liquidity will also be low, so expect trading conditions to be very volatile and unpredictable.
In terms of the Market Reaction Playbook, it is likely to look something like this:
- Stronger-than-expected jobs report = weak crypto (as US dollar, yields and Fed tighten bets).
- In line with expectations = neutral reaction of the market.
- Weaker than expected jobs report = stronger crypto (as US dollar, yields and Fed tighten bets fall).
As noted in recent articles, bitcoin is very much primed for a breakout from a technical perspective, having recently formed an emerald formation.
A strong jobs report could be a catalyst to drive bitcoin lower again toward the support-turned-resistance area at $26,500 or support around $25,500.
A weaker-than-expected report could propel bitcoin above recent highs in the mid-$29,000s, above $30,000, and towards the key $32,500-$33,000 resistance area.
Of course, there is always the risk that a weak report hurts bitcoin as people worry about an impending US recession, and that a strong report helps bitcoin as people’s fear of a recession subsides. .
But in the long run, the financial situation and what happens with the Fed are more important to bitcoin than economic growth.