The Battle for Bitcoin Price
The Bitcoin bulls and bears are locked in a battle as the latest US jobs report impacts the outlook for US monetary policy and its potential impact on crypto. The Bitcoin price has been swinging around the $43,000 level as traders assess the situation.
The latest US employment numbers exceeded expectations, with 353,000 new employees added in January. This forced traders to reduce their bets on a Fed rate cut, initially weighing on Bitcoin.
Markets React to Fed Rate Cut Bets
As the market adjusted its expectations for a rate cut, the Bitcoin price dipped to around $42,500. The probability of a Fed rate cut in March dropped below 20% from close to 40% on Friday, according to CME’s Fed Watch Tool.
Traders have also been pulling back on their expectations for a rate cut by May. The probability of no cuts by May jumped to nearly 30% from around 6% on Thursday.
This shift in expectations is due to stronger-than-expected economic indicators, including inflation, retail sales, consumer sentiment, GDP, job openings, PMI, and now jobs data. These positive indicators suggest that the US economy is still robust and weaken the argument for rate cuts.
Macro Headwinds and ETF Outflows
Bitcoin’s pullback from its yearly highs can be partly explained by macro headwinds and profit-taking in Grayscale’s GBTC after the approval of post-spot Bitcoin ETFs. The GBTC has seen outflows of $6 billion since its conversion from a trust.
However, inflows into newly launched spot Bitcoin ETFs by BlackRock and others have outweighed GBTC outflows this week. In fact, BlackRock’s ETF has reached $3 billion in assets under management.
Where is the Bitcoin Price Headed?
The Bitcoin price is currently stuck within its $38,000-$49,000 range. However, the medium-term risks are tilted towards the upside.
Although strong US economic data may delay rate cuts, tight financial conditions and potential room for rate cuts still exist. This suggests that macro factors will continue to support the crypto market and Bitcoin price this year.
In addition, ongoing inflows to newly launched spot Bitcoin ETFs and the upcoming halving of Bitcoin issuance will further drive demand and reduce sell pressure from miners.
Hot Take: Bitcoin’s Path Ahead
Dips towards the bottom of Bitcoin’s recent price range are likely to be aggressively bought, similar to what happened in January. With a flood of new demand and a supply shock, a push back towards $50,000 is expected in the coming weeks or months.
Wyatt Newson emerges as a luminary seamlessly interweaving the roles of crypto analyst, dedicated researcher, and editorial virtuoso. Within the dynamic canvas of digital currencies, Wyatt’s insights resonate like vibrant brushstrokes, capturing the attention of curious minds across diverse landscapes. His ability to untangle intricate threads of crypto intricacies harmonizes effortlessly with his editorial mastery, transmuting complexity into a compelling narrative of comprehension.