The Bitcoin market currently witnesses a fierce battle between bullish and bearish forces following the release of a significant US jobs report. The Bitcoin price has been oscillating around the $43,000 mark as traders carefully analyze the future direction of US monetary policy and its potential repercussions on the cryptocurrency market.
As of the most recent data, the Bitcoin price hovers at approximately $42,900, exhibiting relatively little change throughout the day.
The latest employment data from the United States has surprised analysts, indicating that the US economy added an impressive 353,000 new jobs in January, surpassing the expected gain of 187,000. Furthermore, the unemployment rate held steady at 3.7%, defying expectations of a rise to 3.8%.
This unexpected turn of events compelled macro traders to reevaluate their predictions of a Federal Reserve rate cut, which initially put downward pressure on Bitcoin.
Markets Pare Fed Rate Cut Bets
The Bitcoin price recently experienced a decline, falling to the mid-$42,500 range. This drop occurred as the probability of the Federal Reserve cutting interest rates by 25 basis points in March decreased to below 20% in the US interest rate futures market. Just days earlier, this probability had been close to 40%, according to the CME’s Fed Watch Tool.
Furthermore, traders have been adjusting their expectations regarding a rate cut by May. The implied probability of no rate cuts by May surged to nearly 30% on Friday, a significant jump from the approximately 6% probability seen just a day prior.
It’s worth noting that around a month ago, the markets were implying a probability of over 70% for at least two rate cuts by May. However, a series of stronger-than-expected economic indicators, including CPI inflation, retail sales, consumer sentiment, GDP, consumer confidence, JOLTs job openings, PMI data, and the latest jobs report, have collectively painted a picture of a robust US economy. This has weakened the argument in favor of rate cuts over the past month.
These macroeconomic factors can be seen as contributing to Bitcoin’s pullback from its earlier highs above $49,000.
Certainly, following the approval of a post-spot Bitcoin ETF, profit-taking in Grayscale’s GBTC presented another significant challenge for the cryptocurrency market.
The GBTC ETF experienced substantial outflows, totaling $6 billion, after its conversion from a trust, according to ETF.com. However, the pace of these outflows has slowed considerably this week, averaging around $200 million per day.
Furthermore, the inflows into recently launched spot Bitcoin ETFs from major players like BlackRock have surpassed the outflows from GBTC this week. In fact, it was reported on Friday that BlackRock’s ETF has reached the milestone of $3 billion in assets under management, potentially boosting overall Bitcoin sentiment and driving the price to session highs above $43,400.
Nonetheless, the Bitcoin price has since retreated back below the $43,000 mark as the ongoing battle between Bitcoin bulls and bears continues for dominance in the market.
Where Next for the Bitcoin (BTC) Price?
The Bitcoin price is currently hovering just below the $43,000 mark, firmly ensconced within the multi-week range of $38,000 to $49,000.
However, the medium-term outlook appears to be tilted towards the upside in terms of price risks.
While strong US economic data might delay the Federal Reserve’s rate cuts as per market expectations, it’s important to note that Year-over-Year (YoY) Core PCE inflation currently lags behind the prevailing interest rate. This implies that financial conditions remain quite restrictive. Even if the economy continues to perform well, there could still be room for rate cuts later in the year.
As a result, the macroeconomic factors should continue to act as a net positive influence on the crypto market and the Bitcoin price throughout the year.
Meanwhile, the continuous influx of funds into recently introduced spot Bitcoin ETFs introduces a fresh source of demand that is not influenced by price fluctuations.
Furthermore, the imminent halving of the Bitcoin issuance rate is set to significantly reduce the selling pressure exerted by Bitcoin miners.
This convergence of heightened demand and a reduced supply is a formula that strongly suggests an appreciable increase in the Bitcoin price.
Episodes where Bitcoin’s value briefly dips towards the lower end of its recent price range are expected to continue being met with enthusiastic buying, as was witnessed in January.
A potential resurgence towards the $50,000 mark is a plausible scenario in the weeks and months ahead.