Bitcoin derivatives traders’ reaction to the underwhelming US Non-Farm Payrolls report could drive prices further upward as Bitcoin price extends its May 2024 rebound to 8% on Friday, surging above $61,000 for the first time in 5 days.Â
Markets Agog as US Non-Farm Jobs Fall Below Expectations
Bitcoin’s post-halving sell-off has stalled since the US Fed announced a rate pause on Wednesday, setting the stage for a mild price recovery phase. The markets witnessed further gains on Friday after the U.S. Bureau of Labor Statistics’ released Non-Farm jobs data for April 2024.
The US labor market added 175,000 non-farm jobs in April 2024, according to the Bureau of Labor Statistics’ latest data. This shows a month-on-month decline of 140,000 jobs, while also falling 28% short of the market’s consensus expectation of 243,000 jobs.
Bitcoin Price Surges Non-Farm jobs data for April 2024
Typically, a decline in Non-Farm jobs indicates a contracting economy, which often nudges regulators towards expansionary monetary policy tweaks. Hence, strategic investors could interpret the underwhelming non-farm payrolls report to be a precursor to imminent Fed rate cut.
Initial crypto markets reactions to the NFP reports release on Friday also echoes this bullish stance.
Within hours of the NFP report release, Bitcoin price surged 4% from $59,000 to a daily timeframe peak of $61,770, as depicted in the chart above. This correlation suggests that the report may have heightened investors’ expectations of a rate cut in Q2.
Rate cuts often increase demand for risk assets like Bitcoin as it lowers cost of debt, as well as returns on the alternative fixed income assets and government bonds.
The next Fed meeting is scheduled to hold on June 11-12. Essentially, a contraction in the jobs market increases the likelihood of a US Fed rate cut to stimulate the economy and prevent a recession. Hence, the rapid BTC purchases witnessed on May 3 could persist as many investors may now seek to aggressively front run the potential upside from the impending rate cut.
Bitcoin bulls seize control of the derivatives markets
Following the lower-than-expected jobs data, BTC bull traders have piled on leveraged positions signaling overwhelming expectations of further price upswings.
Coinglass’ liquidation map shows the amount of leverage that Bitcoin traders have applied on their existing speculative positions around the 10% boundaries of the current prices.
Within hours of the Non-Farm jobs report, BTC leveraged long trades have surged nearly $700 million higher than active short contracts.
The chart above shows that Bitcoin bull traders have mounted leveraged positions (red area) worth $1.89 billion with the 10% boundaries of the current prices, far exceeding the short leverage contracts which currently stands at $1.2 billion at the time of publication on May 3.
Following the money, this implies majority of existing Bitcoin traders are betting big on the anticipation that the next US Fed rate announcement will trigger more BTC price surge.
Bitcoin (BTC) Price Forecast: Reclaiming $63,000 Could Trigger Bigger Gains
Drawing insights from the liquidation charts above, bears now face over $1.19 billion in liquidations if BTC price breaks above the $62,425 mark.
Without sufficient hedge, a mass liquidation of those positions that could set-off a short-squeeze, and drive an accelerated Bitcoin price surge towards $70,000.
However, historical accumulation trends from IntoTheBlock’s in/out of the money chart also affirms this optimistic Bitcoin price forecast. It shows that the $61,770 – $63,583 area has been a major accumulation zone among existing BTC holders in the past.
As seen above, over 1.58 million addresses acquired 461,730 BTC at the average price of $62,575. Considering the traders’ historical tendency to buy more BTC at that price range, another wave of demand could rapidly drive the recovery above $65,000.
However, on the contrary, if Bitcoin fails to flip that resistance cluster in the near-term, prices could tumble toward $55,500 mark.
Disclaimer: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic’s opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
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