(Kitco News) – Bitcoin (BTC) showed resilience in early trading on Friday, while altcoins sold off after the latest U.S. jobs report showed the economy added 303,000 jobs in March, far exceeding economists’ expectations of 200,000.
The blowout number puts the Federal Reserve in an awkward position regarding interest rates as this is but the latest report that signals a rate cut is not warranted despite expectations of market participants.
“The US economy has piled on over 300,000 jobs in the last month. This latest data set shows the US economy isn’t losing heat,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown. “These figures don’t show the much-needed reduction in friction between the number of candidates and vacancies, meaning wages are more likely to remain in an upward trajectory. Not only does this make the fight against inflation more difficult, it puts a potential pin in hopes for an interest rate cut in June.”
“Interestingly, the increase in jobs was partly because of an increase in leisure and hospitality, which has now returned to pre-pandemic levels,” she added. “This is another indication that the economy has plenty of excess energy that may need to be tamed by continued higher rates.”
The unexpectedly high jobs and inflation readings have resulted in volatile trading conditions this week that saw the DXY and U.S. 10-year Treasury yield spike then fall, a pullback in stocks after trading near record highs, a dump in cryptos early in the week only to recover as the week progressed, and five consecutive days were gold hit a new record high.
In response to the heightened volatility and uptick in inflation, the Federal Reserve trotted out multiple representatives to try and calm the nerves of investors, but mixed messages only served to increase the confusion.
“It’s been a week of mixed messages from the Federal Reserve, where cuts are very much still on the table for the year, but policymakers won’t be drawn into giving any guarantees,” Lund-Yates said. “Some corners of the market think cuts could be delayed until 2025, and it’s certainly true that a run of weaker economic data will be needed for these to happen.”
“Investor attention will be squarely focused on big-tech earnings and commentary in the coming weeks, as these industry titans have been a leading cause of wage inflation,” she added. “Ultimately, today’s labour data is a step in the wrong direction, and the Federal Reserve’s dashboard still has some warning lights to deal with before signalling the all-clear for cutting.”
Despite Friday’s jobs report and concerns regarding interest rates, financial markets collectively rallied higher, with all three major indices, Bitcoin, and gold all in the green.
Bitcoin increasingly immune to macro noise
Bitcoin’s price slid lower in the early trading hours on Friday after spiking to $69,360 late on Thursday, retesting support at $66,000 as bears attempted a breakdown to lower support levels.
BTC/USD Chart by TradingView
That changed after the jobs report was released as BTC price surged higher, climbing back above $68,000, with bulls now looking to reclaim support at $68,500.
The resilience of Bitcoin in the face of further delays to interest rate cuts and the outside chance of an interest rate hike follows a strong monthly and yearly performance from King Crypto that suggests it’s separating itself from the noise and providing investors with an exit ramp from incessant money printing.
“Bitcoin concluded the month of March at approximately $71,300, marking a 16.6% increase from the previous month’s closing value of around $61,150,” said Matteo Greco, Research Analyst at Fineqia International. “This monthly surge represents a historic milestone for BTC price action. March witnessed the seventh consecutive month of price growth for BTC, a first since its inception.”
“Throughout Q1, BTC surged from $42,300 at the beginning of the year to approximately $71,300, reflecting a 64.7% increase in price,” he added. “The recent price growth is primarily fuelled by demand for BTC Spot ETFs, which have accumulated over $12 billion in net inflows since their inception. Last week, BTC Spot ETFs saw approximately $850 million in net inflows, followed by $85 million in outflows on April 1st and $40 million in inflows on April 2nd.”
Greco noted that the start of April has seen Bitcoin’s price pull back slightly, and attributed the weakness to a decline in inflows into spot BTC ETFs.
“While there is still strong overall net inflow in BTC Spot ETFs, there is also evidence of reduced sustained demand and some profit-taking, leading to a slower pace of cumulative inflows compared to previous months,” he said. “This is to be expected, considering that the majority of BTC Spot ETF investors are already in profit, given that BTC was priced between $40,000 and $45,000 at the time of their launch.”
Greco said the focus of crypto investors is now on the Bitcoin halving, currently expected for April 20th, which will decrease block rewards for miners from 6.25 to 3.125 BTC.
“Historically, BTC halving events have marked significant points followed by 9-18 months of uptrend, culminating in cycle peaks,” he said. “However, for the first time, BTC reached its all-time high in anticipation of the halving, indicating a departure from previous cycles. If historical patterns repeat, we may witness an uptrend for the remaining nine months of 2024, leading to a cycle peak expected between Q4 2024 and Q2 2025.”
At the time of writing, Bitcoin trades at $68,215, an increase of 0.95% on the 24-hour chart.
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