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Highlights
- US private sector employment increased by only 99,000 in August, the lowest since early 2021, sparking concerns about a recession.
- The upcoming NFP release on September 6 will be crucial in setting the tone for the September 18 US Federal Reserve's interest rate decision.
- Bitcoin's price is expected to remain bearish, if NFP data comes in hotter-than-expected.
Bitcoin price predictions echo a bearish outlook as the US private sector employment increased by 99,000 in August. This data point was last seen in early 2021, and compared to the previous month’s revised number of 110,000, the US jobs data shows a steady decline.
U.S ADP NONFARM EMPLOYMENT CHANGE (AUG) ACTUAL: 99K VS 122K PREVIOUS; EST 145K
— *Walter Bloomberg (@DeItaone) September 5, 2024
What’s Next for Bitcoin Price Prediction as US Employment Tanks?
The US employment in the private sector saw a decline and could indicate what to expect ahead of the September 6 Nonfarm Payroll (NFP) release. The previous NFP data released in late July sparked recession rumors. But with the Bank of Japan’s interest rate hike, the financial markets worldwide saw a sharp correction, indicating that the rumors might have some steam. Crypto markets took a major hit in late July as Bitcoin price tanked 30%, and altcoins saw an even steeper correction.
Investors are waiting with bated breath for the September 6 NFP report since it will be pivotal in setting the tone for the September 18 US Federal Reserve’s interest rate decision.
Peter Berezin, Global Strategist and Director of Research at BCA Research, notes that the NFP’s job data is skewed and does not provide the full picture. Berezin adds that while the “overall level of job openings on Indeed has been stable,” but warns that “the number of NEW openings has been trending lower.”
This is “worrying,” says Peter Berezin, as crypto market analysts remain uncertain about what to expect next. While some suggest that rate cuts are bullish for risk assets such as cryptocurrencies, others point to a weakening market and bearish macroeconomic conditions and expect a recession that kickstarts in the US and spreads to the rest of the financial markets.
Plummeting US Employment Numbers & Fed Rate Cut Odds Increase Recession Worries
Late July’s events tested the market’s resilience and found that it wasn’t much. This short-term crash caused the Sahm’s recession signal to light up. Moreover, the Joshi Rule also flashed a similar recession signal. Many believe the September 18 Fed interest rate decision could be the make-or-break scenario and that the Nonfarm Payrolls will set the tone for this event.
According to CME’s FedWatch Tool, the probability of a 25 basis point rate cut has spiked to 61%.
An interesting observation is the eerie similarity between the S&P500 price action of 2007 and 2024. Based on the current price action, markets seem to be front-running the bearish outlook, as S&P500 has shed 169 points in the past six days
Bitcoin Price Forecasts Bearish Outlook Could Extend
The daily chart shows a series of lower highs and lower lows since the March all-time high (ATH). Since Bitcoin is in a clear downtrend and has shown no signs of recovery, it would be wise to assume that the bulls are losing this fight.
Here are two outlooks that investors explore:
- If the US NFP data comes in hotter-than-expected, then the Bitcoin price prediction hints at a rally.
- A cooler-than-expected jobs data on top of the 3-year low noted in the US private sector jobs could crush the hopes of bulls.
In the first case, the BTC price could bounce to $60,000. If the $63,000 resistance level is flipped into a support floor, it will enforce the ongoing recovery rally thesis. Only a weekly candlestick close above $70,000 will confirm the end of the six-month down-trending consolidation.
However, this is unlikely to happen. Veteran trader Peter Brandt notes that none of the “post halving time in BTC history when new ATH has taken this long.” Brandt added to his bearish outlook by stating that the inflation-adjusted 2021 highs and the current ATH are not violated and are still intact.
In the bearish case of NFP coming in cooler than expected, investors can expect Bitcoin price to retest the weekly support levels, extending roughly from $50,000 to $52,000.
All in all, the market outlook, be it crypto or traditional, remains uncertain and on the edge. Investors are waiting for two key events: the US Nonfarm Payrolls on September 6 and the Fed interest rate decision on September 18. These macroeconomic events will predict what happens to Bitcoin price and the broader crypto markets.
Frequently Asked Questions (FAQs)
1. How might the decline in US employment to 2021 lows impact Bitcoin's price?
2. What is the current trend in Bitcoin's price?
3. What are the two possible outcomes for Bitcoin's price based on the NFP data?
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