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James Carter

June 2, 2023

How the Upcoming US Jobs Report Might Impact the Bitcoin Price

On Friday, June 2nd, US jobs reports on the US labor market for the month of May are scheduled to be released. The data, which is regularly examined by officials at the US Federal Reserve, might cause volatility in the Bitcoin market, depending on how and if it impacts expectations for more interest rate hikes from the US central bank. The data is being thoroughly scrutinized by policymakers at the US Federal Reserve.

How the Upcoming US Jobs Report Might Impact the Bitcoin Price?

The labor market is expected to add 193,000 jobs in May, which is slightly slower than the pace at which jobs were added in April, which was 253,000. The media conducted a number of polls of economists on which this information is based.

At the same time, it’s anticipated that the unemployment rate will increase slightly to 3.5% from its record low of 3.4% and that the month-over-month pace of earnings growth will decrease to 0.3% from 0.5%.

If the figures come out as predicted, it will signal that the labor market in the United States continues to hum along nicely, which will push back against the concept that the United States is anywhere close to heading into a recession.

In the event that this causes markets to begin rebuilding their expectations for additional monetary policy tightening from the Fed, it may have a negative impact on cryptocurrencies such as Bitcoin.

Recent contacts, however, show that this might not be the case, even if the jobs number that will be released on Friday exceeds expectations.

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Fed Signals Pause Likely at This Month’s Meeting

On Wednesday, Fed policymaker and nominee to pick up the seat as Vice Chairman Philip Jefferson voiced his preference for the Fed to halt its interest rate increasing cycle at the upcoming meeting this month. Jefferson is vying for the position of Vice Chairman of the Federal Reserve.

“Skipping a rate hike at an upcoming meeting would allow the committee to see more data before making decisions about the extent of additional policy firming,” Jefferson said. “[T]hese decisions could help determine how much additional policy firming is necessary.”

His comments were an echo of what Fed Chair Jerome Powell had previously expressed in a speech he gave the previous month.

Powell mentioned the want to study the lagged effect of the previous 15 months of interest rate tightening as a cause for being more cautious. He also cited concerns about tighter lending conditions in the wake of March’s small “bank crisis” as a reason for being more cautious.

In spite of the fact that several Fed policymakers have expressed a preference for ongoing tightening, interest rate futures markets in the United States imply that there is an 80% probability that the Federal Reserve keep interest rates at their current level of 5.0-5.25% this month. This is according to the CME’s Fed Watch Tool.

Even a robust employment report might not be enough to significantly alter these views in light of recent statements made by central Fed policymakers such as Jefferson and Powell.

But Downside Bitcoin Price Risks Remain

However, a far stronger-than-expected jobs report may still undermine hopes for the Federal Reserve to decrease interest rates before the end of 2023, which may weigh on Bitcoin.

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According to the current projections made by the CME’s Fed Watch Tool, there is a greater than 65% possibility that the Fed will reduce interest rates by maybe at least 25 basis points from their present levels before the end of the year.

The recent adverse trade bias that has been noticed in the Bitcoin market might therefore be strengthened by a positive jobs report.

The most recent price was around in the $26,800 range, which is almost exactly on par with the 100-day Moving Average and only slightly below the 21-day Moving Average.

As a result of Bitcoin’s recent rejection of its 50DMA and a downward trend from the yearly highs in the low $20,000s, the majority of technicians continue to hold a negative outlook.

A number of people believe that a retest of recent lows of around $26,000 is likely and that Bitcoin may be in the process of constructing a descending triangle formation. If this structure were to break to the downside, it could spark a test of, or possibly a breach below, crucial long-term support in the low-$25,000s.