Bitcoin experienced a notable increase this week, briefly reaching $113,384 before reversing course as the market reacted to weaker-than-expected US payroll data. The significant surge saw Bitcoin rise 4.75% from the previous week’s low of $109,250, as traders prepared for the release of the US Nonfarm Payrolls (NFP) report on Friday.
The NFP data revealed that only 22,000 jobs were added in August, falling well short of forecasts that anticipated 75,000 jobs, and a previous increase of 73,000 in July. This disappointing figure contributed to a rise in the unemployment rate to 4.3%, aligning with expectations but higher than July’s 4.2% rate. Additionally, wage growth showed signs of slowing, decreasing to an annual rate of 3.7%, down from 3.9%. This wave of underwhelming labor market statistics has led to heightened speculation surrounding potential Federal Reserve rate cuts, with probabilities of a cut now at 88.2%. Lower interest rates and a weaker dollar are typically beneficial for risk assets, including cryptocurrencies like Bitcoin.
Onchain data from the crypto market indicated traders anticipated the softer payroll results, with stablecoin inflows into exchanges exceeding $2 billion. This trend suggests that investors were accumulating cash reserves in preparation for potential market opportunities. Historical data indicates that when such inflows occur, it often signals “dry powder” set to flow into Bitcoin and Ethereum once positive market catalysts arise. Furthermore, Bitcoin’s open interest has surged above $80 billion, near historic highs, signaling the accumulation of leveraged positions in the face of ongoing price consolidation around the $110,000 mark.
As macroeconomic pressures ease, the bullish positioning evident in the onchain data suggests a potential build-up for market volatility, favoring an upward trajectory in Bitcoin’s price. However, despite an initial post-NFP rally, Bitcoin saw a quick reversal, dropping 1.5% shortly after the New York trading session opened. This decline pushed the cryptocurrency below $111,000 after retesting a key supply zone between $112,500 and $113,650. Such abrupt intraday movements are not uncommon and can be attributed to early long liquidations, which saw over $63 million wiped out in just four hours, as well as stop-hunting tactics employed by market makers to capitalize on crowded positions.
Observing the one-hour price chart, while Bitcoin faced a setback, it maintained a pattern of higher highs and higher lows, indicating an ongoing uptrend. As long as Bitcoin remains above the $109,500 threshold, the short-term bullish trend should persist, suggesting that recent dips appear more like liquidity sweeps rather than a shift in overall market direction.
However, a broader analysis of the higher time frames reveals a need for cautious optimism. With just two days until the weekly close, it is too early to assert that a definitive bottom has been formed. A decisive close above $112,500 in the coming days would significantly strengthen the argument that a base is established around $107,500. Until then, the wider market appears to be in a transitional state, navigating between macroeconomic optimism and local supply pressures. In summary, while the lower-timeframe outlook remains bullish, a solid confirmation of a durable market bottom is contingent on holding above the identified resistance level in the weekly close.
As always, readers are reminded that investing in cryptocurrencies carries inherent risks, and it is crucial to conduct thorough research before making any investment decisions.
