The US NFP Data Brought Good News For Bitcoin Traders, Will It Change The Current Sell-off?
As traders continue to be concerned about the sell-off from Mt. Gox’s payout of Bitcoin to its investors, the price of Bitcoin is well on its way to record yet another week of heavy losses. On the other hand, investors and traders have been holding out hope that the data on the number of people without jobs in the United States will bring them some positive news today, as the stage was very much set for a negative number to be released. However, the number brought a bit of a mixed message for BTC traders and investors, and here is more on this.
Background
A three-day drop of 14.74% brought the price of Bitcoin (BTC) down to $53,540 on July 5, representing a loss of a four-month price range. One of the longest winning streaks in history came to an end when Bitcoin (BTC) lost more than 25 percent of its market value in the past thirty days.
Prior to the release of the US non-farm productivity data, the price of bitcoin had been subjected to a significant amount of selling pressure. When you take a look at the weekly performance of the Bitcoin price, which is displayed on the chart below, you will notice that the cryptocurrency king has been in the process of being beaten down for the past four consecutive weeks. This is the largest weekly loss for the Bitcoin price since May 2024. An illustration of significant price levels over a period of one week is provided in the chart below
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Why Has The Bitcoin Price Been In A Sell-Off Mode?
A significant portion of the sell-off in bitcoin’s price can be attributed to the fear of a potential payout from Mt. Gox at the moment. Nobuaki Kobayashi, the trustee for the Mt. Gox Rehabilitation, made the announcement today that the long-awaited repayments in Bitcoin (BTC) and Bitcoin Cash (BCH) to creditors of the defunct cryptocurrency exchange Mt. Gox have officially begun.
To what extent did the US NFP data support the price of bitcoin?
The first thing that needs to be done is to gain an understanding of the history of the labour market in the United States. This market has a very close relationship with the monetary policy of the Federal Reserve and the dollar index, both of which have a significant impact on the price of bitcoin.
Throughout this week, the labour market in the United States has been sending out a variety of signals. For example, if you pay attention to the JOLTS data, the Weekly Jobless Claims number, and the US ADP print, it is widely understood that the only piece of positive news for the Federal Reserve was the slowdown in wage growth in the United States, which is certainly something that everyone is happy to hear. When it comes down to it, nobody wants to see inflation spiralling upward, and if the rate of wage growth continues to rise, this could become a real ossibility. Basically, in a nutshell, if wage growth begins to show a bit of a slowdown, then it means that the Fed will cut the interest rate sooner rather than later, which would be positive for the Bitcoin price.
Now, take a look at the ADP number for the United States. The vast majority of traders have been keeping this in mind as the base-case scenario, which is that the number for today is not going to be very good at all. In comparison to the previous number, which was 272 thousand, the forecast for today’s number was 191 thousand. Compared to the figure that came before it, the threshold was significantly lower in a number of different aspects. However, the number that was printed was 206 thousand. Because of this, the unexpectedly high number did not bode well for the price of Bitcoin, which is why the actual price action was negative as soon as the numbers were released.
The price of bitcoin, on the other hand, did move to the USD shortly after the initial reaction, as traders paid attention to the details.
Trading bitcoins exhibits hope.
Immediately following the initial announcement, smart money quickly paid attention to all of the significant aspects of today’s job number that influence the monetary policy of the Federal Reserve, which in turn influences the price of bitcoin. The bar was set low for the headline number, which was the US NFP daya, as was mentioned earlier. This was the case going into today’s data tally. Consequently, the fact that the actual number was higher than what we had anticipated did not come as a major surprise to us. The fact that the unemployment rate has increased slightly as a result of a significant rise in the number of people actively seeking employment is the actual factor that is most significant for today’s number. The earlier narrative that the economy of the United States is slowing down is corroborated by this. In the event that investors shift their attention away from the micro lens, which is solely focused on the impact of a sell-off from Mt. Gox, this is without a doubt very positive for the price of Bitcoin.
As a conclusion,
In a nutshell, if we were to summarise everything, the Federal Reserve is currently completely in a corner, and the economic data from the United States is throwing heavy punches at them. It is highly possible that traders may pick up the momentum where they left off this week, but a large part of the Mt. Gox sell-off is now baked into the price, and should investors begin to pay attention to other fundamentals, we should see much improvement in the bitcoin price.
