Here’s why Bitcoin and altcoins could rise after weak NFP data

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As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of economic data releases that have sent shockwaves through the market. Today’s Nonfarm Payroll (NFP) data release is no exception, and it seems to be causing quite a stir.

Financial markets showed signs of uncertainty following the release of lackluster nonfarm payroll figures by the U.S., which hinted at a more accommodating stance from the Federal Reserve.

As a crypto investor, I’ve noticed a dip in the prices today. Bitcoin (BTC) has retreated from approximately $72,500 down to around $70,000. Similarly, Ethereum (ETH) has dipped by over 3% within the last 24 hours, putting it at around $2,500. This dip has caused the total market capitalization of all coins to drop to about $2.45 trillion. Furthermore, the crypto fear and greed index has shifted from the “greed” zone (65) to a more neutral “fear and greed” zone (57).

U.S. stock market futures showed optimism today, as the Dow Jones, S&P 500, and Nasdaq 100 all experienced growth. Specifically, the Dow Jones increased by 230 points, the S&P 500 added 33 points, and the Nasdaq 100 saw a rise of 130 points.

As a crypto investor, I noticed a concerning dip in job growth this October, with just 12,000 positions added compared to the robust 223,000 jobs created in September. This figure fell far short of the expected median of 106,000 and even missed the mark set by the ADP private sector payrolls at 115,000.

The bureau explained that the slow growth in job creation was due to the impact of recent hurricanes in the United States and labor disputes at significant companies like Boeing. As a result, manufacturing jobs decreased by 46,000, while government jobs increased by 40,000.

On a bright side, the unemployment rate kept steady at 4.1%, while wage development continued to be robust. The average hourly income increased by 0.4% from last month and experienced a yearly growth of 4.0%.

UPDATE: October saw only 12,000 new jobs in the U.S., falling short of the projected 106,000.

— The Kobeissi Letter (@KobeissiLetter) November 1, 2024

Why the NFP data matters to Bitcoin and other cryptocurrencies

Hypothetically speaking, this information might have a beneficial impact on Bitcoin, alternative cryptocurrencies, and the stock market for two possible reasons. Initially, the announcement was made close to the American elections, which could sway voters towards Donald Trump.

Trump has expressed favor towards the cryptocurrency sector and proposed appointing someone supportive of this field to lead the Securities and Exchange Commission. At present, Gary Gensler is chair, and under his leadership, the SEC has received criticism for enforcing regulations instead of clearly defining them. Most recently, the commission issued a warning, known as a Wells Notice, to Immutable X (IMX), a gaming-focused network operating on layer 2.

If the relatively low non-farm employment growth figures persist, it might prompt the Federal Reserve to further reduce interest rates at a faster pace, considering the downward trend towards 2% inflation, as indicated by the drop in U.S. bond yields after the latest report was released.

As a researcher, I’ve noticed that the Federal Reserve has initiated a rate reduction, and it seems this downward trend may continue. The CME FedWatch tool suggests that the market is predicting interest rates to conclude 2025 at approximately 3.50%, which is lower than the current 5.0%.

In simpler terms, when the Federal Reserve reduces interest rates, riskier investments such as Bitcoin and stocks become more appealing because some money moves out of safer options like money market funds, and this shift is evident in the increasing investment flows towards Bitcoin ETFs.

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2024-11-01 16:38