In what can only be described as an unprecedented episode, Bitcoin (BTC), the world’s premier cryptocurrency, experienced tumultuous oscillations in the wake of a remarkably strong US jobs report for September. The report unveiled an impressive addition of 336,000 positions last month, almost twice the predicted 171,000. This revelation emphasizes the robust health of the US economy and lays the groundwork for two possible scenarios: an additional interest rate hike from the US Federal Reserve (Fed), and a subsequent maintenance of these increased rates for a protracted duration.
Predictably, the subsequent surge in US yields played a role in momentary instability in cryptocurrency prices. Bitcoin experienced a mild dip, descending from the $27,700s to a low of $27,200. For context, elevated yields on risk-free assets like US government bonds often diminish the allure of riskier, non-yielding assets – a category Bitcoin arguably falls into.
However, as US yields receded from their pinnacle, Bitcoin and the wider crypto market recovered strongly from their intra-day troughs. Bitcoin recouped its lost ground and challenged the $28,000 mark, demonstrating a 3% elevation from its session lows.
Several factors might be linked to this abrupt reversal. On the one hand, it was observed that the US jobs report wasn’t uniformly robust. An unexpected uptick was recorded in the unemployment rate and a deceleration in the MoM pace of wage gains. This served to sow the seeds of doubt among investors regarding the actual strength of the US jobs market, consequently prompting a turnaround.
At the same time, investors seemed increasingly receptive to the concept that strong jobs figures could inadvertently predict a gloomy outlook for the economy’s long-term health. This theory contends that stronger job figures might embolden the Fed to perpetuate inordinately high interest rates, thereby stifling the economy.
One indisputable observation from recent Bitcoin activity is a growing tolerance for higher interest rates. Despite confronting the formidable headwinds of elevated US yields, Bitcoin remained resolutely above the $25,000s, displaying admirable resilience.
Looking into the future, Bitcoin boasts a short-term uptrend but needs to breach a key resistance region to sustain this momentum. Currently situated tantalizingly close to the $28,000 mark, which is incidentally the site of Bitcoin’s 200DMA, surmounting this hurdle could pave the way to a retest of the $30,000 threshold.
Though the possibility of a swift surge past this key level and eyewitness new yearly highs beyond $31,800 are challenging to predict in the face of persistent macro headwinds, the near future might witness a shift in this narrative. A shift that could project the much anticipated approval of spot Bitcoin ETFs in the US into the limelight, fuelling Bitcoin’s institutional adoption and forecasting a bullish prospect. Evidently, Bitcoin option traders align with this optimistic prediction. As per data presented by The Block, the 25% delta skew of Bitcoin options expiring in 180 days is significantly positive at around 5. This suggests investors continue to pay a premium for options that result in Bitcoin price upside versus equivalent options that compensate in the event of a downward price spiral.
Source: Cryptonews
