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James Carter

April 7, 2023

Here’s How the news on Friday will affect Bitcoin Price

The US jobs report for March is due out on Friday, and it could cause a lot of changes in the Bitcoin market.

Traders will pay close attention to the non-farm payroll numbers (the net change in jobs in the economy), which are expected to slow from 311,000 a month ago to 239,000, as well as measures of labor market slack and wage growth.

How the news on Friday will affect Bitcoin Price

The jobless rate and other measures of labor market slack show that up until now, at least, the US labor market has been in historically good shape over the last year or so.

At 3.6%, the jobless rate is expected to stay close to a low point that hasn’t been seen in decades.

Wage growth, on the other hand, is still going much faster than the Fed’s inflation goal of 2%, even though it has been slowing down in recent months and is expected to slow down even more on Friday.

A significant report on the jobs market follows a string of poor US data.

Most of the US labor market data released this week before Friday’s report has been worse than expected. Because of this, most experts expect Friday’s report to also be worse than expected.

The number of job openings in the US economy, which is a good indicator of labor demand, fell to a two-year low of under 10 million in February, according to JOLTs figures released on Tuesday.

On Wednesday, payroll company ADP’s estimate of the net change in employment in the US was lower than expected, and on Thursday, yearly changes to the number of weekly jobless claims in the US went up.

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This week, there were two ISM PMI reports that were weaker than expected. The first one, which came out on Monday, showed that the US manufacturing sector was shrinking more than predicted.

The second report, which came out on Wednesday, showed that growth in the US services sector had almost stopped.

Bets on a recession and the Fed cutting rates rise

All in all, the bad news this week has made people think that 1) the Fed’s tightening over the past year is finally having an effect on the economy and a recession is likely to happen later this year, and 2) the Fed will soon cut interest rates because of this.

The March bank crisis and the expected chilling effect it will have on lending in the coming quarters add to the downside risks facing the US economy and make a case for a Fed cutting cycle even stronger.

These are big-picture trends that have put a lot of pressure on the US dollar and US prices in the past few weeks and helped the Bitcoin price a lot.

Even though BTC/USD has been going nowhere for the last three weeks near $28,000, it is still up around 70% for the year and a huge 43% from last month’s lows below $20,000.

The US jobs data released on Friday will be looked at through the lens of how it affects these macro stories. For example, data that shows the US labor market is getting worse will increase the case for the Fed to cut interest rates to stop a possible recession.

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On the other hand, data that is better than predicted might ease some worries about a recession and cause Fed tightening bets to be placed again.

For what it’s worth, the CME’s Fed Watch Tool says that there’s a close to 50/50 chance that the Fed will raise interest rates at its meeting next month. If this happens, it would be the last rate hike of this cycle.

Money markets also give a chance of about 50% that the Fed will cut interest rates by at least 25 basis points (bps) below their current level (which is between 4.75 and 5.0%) by July before lowering them to around 4.0 by the end of the year.

How the news on Friday will affect crypto

Given that US markets will be closed for the Good Friday holiday, this is an unusual time to share the jobs report.

Crypto usually follows what happens to the US dollar, US rates, and the US stock market.

But Bitcoin and other similar currencies won’t have these asset groups to track and trade on.

Because of the holiday, there will be less money in the market, so dealing will be very rough and hard to predict.

The playbook for how the market will respond is likely to look something like this:

  • Jobs report better than expected = weaker crypto (as the US dollar, yields, and Fed tightening bets rise).In line with predictions = No reaction from the market.
  • A worse-than-expected job number makes crypto stronger. (as the US dollar, yields, and Fed tightening bets fall).
  • Recent articles have pointed out that, from a technical point of view, Bitcoin is very close to being ready for a breakout. This is because it has recently made a pennant structure.
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A better jobs report could be the thing that sends Bitcoin prices back down to the area around $26,500, where support turned into resistance, or to the area around $25,500, where support turned into resistance.

A weaker-than-expected report could push Bitcoin above recent highs in the mid-$29,000s, above $30,000, and towards the key $32,500-$33,000 support area.

There is always a chance that a weak report will hurt Bitcoin because people will worry about a US recession, while a good report will help Bitcoin because people will worry less about a recession.

But in the long run, what happens with the Fed and how the economy is doing are more important to Bitcoin than growth in the economy.

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