Bitcoin’s Largest Weekly Loss Since FTX’s Collapse Raises Concerns Amid Focus on U.S. Nonfarm Payrolls
The latest developments surrounding the Mt. Gox situation have triggered a significant downturn in the value of Bitcoin (BTC), marking its most substantial weekly decline since November 2022. Amidst this turmoil, there is a glimmer of hope pinned on the upcoming U.S. jobs report, with one analyst suggesting it could help stabilize the cryptocurrency’s trajectory.
Bitcoin, the dominant player in the cryptocurrency realm based on market capitalization, experienced a dip below the $54,000 mark early on Friday following reports of Mt. Gox, the now-defunct exchange, moving BTC valued at $2.6 billion for potential creditor repayments. However, a subsequent announcement by Mt. Gox regarding the initiation of repayments to its customers seemed to have a calming effect on Bitcoin’s volatility.
At present, Bitcoin has seen a decline exceeding 13% for the week, representing the most significant weekly drop since the collapse of FTX in November 2022, as per data from CoinDesk and TradingView.
On the horizon is the release of the nonfarm payrolls (NFP) report for June by the U.S. Bureau of Labor Statistics, scheduled for Friday at 12:30 UTC (08:00 UTC). Economists surveyed by FactSet anticipate the NFP data to reveal an addition of 190,000 jobs in June, a notable slowdown from the 272,000 jobs added in May, while maintaining the unemployment rate at 4%.
In a potentially favorable development regarding inflation, projections indicate a deceleration in average hourly earnings growth to 0.3% in June from 0.4% in May, translating to a 3.9% year-on-year increase, down from the 4.1% reported in May.
Macro traders, who have been cautiously navigating the BTC market since 2020, are closely monitoring the timing and extent of Federal Reserve rate adjustments. Following last week’s subdued U.S. PCE inflation data, traders have nearly factored in two rate cuts for the year, according to the CME’s FedWatch tool.
Expectations of dovish sentiments favoring risk assets could gain further traction if the upcoming jobs report reveals weaker-than-expected growth, as noted by Jag Kooner, head of derivatives at Bitfinex. Kooner highlighted the potential impact on Bitcoin prices, with investors possibly turning to alternative assets in anticipation of a more accommodative monetary policy.
Kooner emphasized the significance of market sentiment and the demand for risk assets in determining the magnitude of inflows into spot Bitcoin ETFs, particularly listed in the U.S., favored by macro traders and institutions. The analyst cautioned that the overall sentiment and appetite for risk assets would influence the flow of investments, indicating that Bitcoin’s performance could be influenced by the perceived resilience of the job market and the likelihood of imminent rate adjustments.
