There are two key events to consider when looking at what’s likely to happen this week. The first is the end of the first quarter of 2023 and the expectations for the next quarter. The second is the US Non-Farm Payrolls (NFP) data, which will be released this week. Crypto analyst Akash Girimath explains why these are important for a bull rally for cryptocurrencies.
We welcome the second quarter of 2023
cryptocoin.comAs you follow, the first quarter of 2023 has been extremely bullish for crypto participants. However, it has not been so for traders in traditional financial markets. The chart below shows the performance of Bitcoin (BTC), Ethereum (ETH), S&P500, NASDAQ100 and gold. Clearly, BTC and ETH are in the club of winners in terms of returns amid the ongoing global banking crisis.
Given the historical performance of the leading cryptocurrency Bitcoin, the following article examines BTC’s key levels across weekly, daily and four-hour timeframes. While the outlook for the leading crypto remains bullish, a minor pullback is likely, which will be a boon for investors looking to accumulate BTC.
Also, Bitcoin Dominance, the percentage share of BTC’s market cap relative to the total crypto market cap, is in a critical hurdle. A drop in Bitcoin dominance could lead to profits returning to altcoins, which could lead to an alt season. The concept of capital rotation for cryptocurrencies, alt season and it is important to watch which altcoin category will be pumped.
Why is NFP data important to cryptocurrencies?
Unemployment Rate and NFP data are scheduled to be released on Friday, March 7. That will set the tone for the US Federal Reserve’s next move, such as raising or pausing interest rates. In early March, the positive correlation between BTC and the stock market fell due to growing concerns about the state of banks. As a result of this turmoil, cryptocurrencies have seen a massive inflow of capital. This catalyzed the continuation of the bull run that started in January 2023.
In parallel, the correlation between BTC and gold has been on the rise, going from -0.5 to 0.92 between March 12 and April 3. This strengthened the situation for both assets to regain their safe harbor status. However, as the bullish momentum wore off, Bitcoin’s rally came to a halt. Therefore, this caused the above-mentioned correlation to plateau.
Recently, the correlation between Bitcoin price and the S&P500 has returned, increasing from -0.25 on March 6 to 0.49 as of April 3.
Therefore, it will be interesting to see how the Bitcoin price reacts to upcoming macroeconomic events such as the unemployment rate and NFP figures. The consensus for NFP is 240k, much lower than the previous report of 311k. Depending on how much and in which direction the divergence is, Bitcoin price can either fall or find an opportunity to continue its rise from there.
A positive surprise of a larger size could be interpreted by the market as bullish for the US Dollar. This can start a quick sale, too. On the contrary, a large enough negative surprise can catalyze an upward move.
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