Friday’s US nonfarm payrolls report could inject volatility into the cryptocurrency market. Economists expect job growth in April to slow sharply, with payrolls expected to increase by just 62,000 compared to 172,000 in March, while the unemployment rate will remain stable around 4.3%, according to Reuters.
At first glance, the weaker hiring data appears to support bitcoin and other risk assets. A weaker labor market could reinforce expectations that the Federal Reserve will keep rates steady this year and potentially delay any tightening cycle beyond that. For now, markets are pricing in stable rates this year, followed by an increase next year.
But the picture is more complicated.
In addition to the payrolls release, markets will also closely monitor wage growth. Average hourly earnings are expected to increase 3.8% year-on-year, up from 3.5% previously. Tough wage pressures, combined with already high oil prices, could reinforce concerns about global inflation and complicate the Federal Reserve’s path forward.
In other words, the market reaction may depend less on job creation and more on whether wage growth cools. With traders already pricing in the possibility of future rate hikes next year, risk assets may need a weaker-than-expected earnings number to make a meaningful rally.
For now, analysts remain generally constructive on bitcoin, with the $75,000 level seen as critical support.
“Bitcoin has returned below $80,000, extending its pullback from the 200-day moving average after briefly entering overbought territory near the upper limit of its uptrend channel. The lower limit of that channel sits near $77,500, although a broader trend breakout would likely require a drop below recent lows around $75,000,” said analyst Alex Kuptsikevich. FxPro Market Head.
Beyond payrolls, traders are also keeping an eye on upcoming minutes from the Federal Reserve’s April meeting, as well as developments in the Strait of Hormuz and global oil markets.
“Prediction markets assign a 97% probability that Hormuz will not normalize by May 15. The gap between those prices and the stock market’s willingness to temper each rally is the defining contradiction of the week,” Singapore-based QCP Capital said in a market note. “If crude oil fails to de-escalate before the May 20 FOMC minutes, the stagflation narrative will be much harder to dismiss.”
Stay alert!
Read more: For an analysis of current activity in altcoins and derivatives, see Crypto Markets Today. For a complete list of this week’s events, check out CoinDesk’s “Crypto Week Ahead.”
What is trend?
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Today’s sign
The Coinglass chart tracks the Coinbase Bitcoin Premium Index, which measures the price difference between bitcoins traded on Coinbase, an indicator of U.S. spot and institutional demand, and offshore exchanges like Binance. Readings in green indicate that BTC is trading at a premium on Coinbase, indicating increased demand from US-based investors.
The premium has turned into a discount this week just as Bitcoin looked to settle above $80,000. Curiously, the rally has stalled.
Historically, bull runs have coincided with persistent positive readings on the index. Therefore, the next bullish move guarantees the return of the premium.
