Non-Farm Employment in the US is projected to increase by 205,000 in February, after a staggering increase in January. Jerome Powell’s relatively hawkish statement on Tuesday drove Bitcoin and cryptocurrency prices down. If upcoming jobs and inflation data beat expectations, the Fed will likely offer a larger rate hike, pushing the BTC and cryptocurrency market down.
What is Non-Farm Employment data and why is it important?
The Non-Farm Payroll (NFP) measures the number of workers in the United States excluding those in farming, private households, nonprofits, and the active military. The Bureau of Labor Statistics (BLS) surveys private and government agencies across the US and reports Nonfarm Payrolls to the public through a monthly ‘Employment Status’ report. NFP additions and the unemployment rate are the two headings of the report, but policymakers use all available data to assess the state of the US economy and forecast future economic activity.
An increase in NFP indicates that the economy is growing, spending is expected to rise, and a spike in jobs can push inflation up. So it’s important to pay attention to this data. This is seen as negative for the economy and factors in the Fed’s next rate hike decision.
Bitcoin price reaction to US NFP data
US NFP data has surprised market participants for the last five times. Every time employment data came in, the labor market was tight as firms prepared for the economic slowdown and technological layoffs. It should be noted that the difference between actual and forecast data, rather than the employment figures themselves, influences the market’s reaction. As the chart below shows, Bitcoin price has reacted differently to the last five US NFP data, where the actual numbers are higher than predicted. The numbers shown in the chart below describe the BTC price response in the week following the release of the US NFP data.
Other factors affecting Bitcoin price in the last five data releases include the collapse of the FTX exchange, the bankruptcies of several crypto lenders and firms, US regulatory crackdown on cryptocurrency exchanges and stablecoin issuers, the announcement of Mt. taking.
The chart reveals that the immediate (same day) response is a drop in Bitcoin price. When the actual NFP figure is 300,000 or higher, it often causes an increase in selling pressure on risky assets like Bitcoin and cryptocurrencies.
Expert opinion: What to expect from risk assets?
Market analyst Eren Şengezer thinks that the US Senate is ready to increase the rate of increase in interest rates. Şengezer states that the hawkish Fed bets dominate the markets. Below the forecast, the expert believes a disappointing NFP data could make room for a recovery in risky asset prices. In this context, the analyst makes the following assessment:
The CME Group FedWatch Tool shows markets are pricing in a 78% probability of a 50bps rate hike in March. It also suggests there is more room for additional strengthening of the US Dollar should NFP break the market consensus. In this scenario, risk-sensitive assets are likely to have difficulty finding demand. On the other hand, disappointing NFP data (like 100,000) may cause investors to consider the possibility of a 50bps increase at the next meeting. In that case, we’re likely to see a risk rally, at least until next week’s Consumer Price Index data.
Where will the bitcoin price go?
Bitcoin market participants are trending bearish ahead of the release of US NFP data. cryptocoin.comAs you follow, the FUD created by Silvergate negatively affected the price of Bitcoin. BTC holders are concerned about the increasing selling pressure from the combination of Powell’s hawkish comment and an over-expected increase in Nonfarm Payrolls in February 2023. Bitcoin is struggling to recover from the drop from $23,539 to $20,915 on March 3. Crypto analyst Ekta Mourya points to the following levels for BTC.
As the chart below shows, Bitcoin price is in a short-term uptrend that started in January 2023. The asset is currently trading sideways since its February drop from $25,200. BTC price is currently below its 100- and 200-day long-term Exponential Moving Averages. Bitcoin price slipped below the 50-day EMA of $21,315 at $20,915.
If BTC starts a relief rally, the asset is likely to face resistance at the 100-day and 200-day EMAs at $22,325 and $21,797. The ascending target is the $25,205 level, which has acted as resistance for most of 2022 and 2023.
The downside targets are $21,533 and $18,725, both levels acting as resistance and turned into support by Bitcoin during its rally to $25,205. The Relative Strength Index is currently 38.40 and the one-day price chart shows no signs of divergence. While it is not yet clear how the US NFP data will affect the Bitcoin price, there is room for recovery in the leading crypto asset.
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