(Kitco News) – Financial markets trended higher in early trading on Friday after the October jobs report showed that the U.S. economy added only 12,000 jobs for the month, well below the 100,000 predicted by economists.
The dismal job print all but assures that the Fed will implement a 25 basis point interest rate cut at the upcoming FOMC meeting in six days. The CME FedWatch Tool now puts the odds of such a cut at 99.9%, while the odds for another 25 bps cut in December rose to 81%.
“With the rate cut decision scheduled for next week, Bitcoin is particularly sensitive to inflation metrics, as these indicators will heavily influence the Fed’s decision in next week’s meeting,” said Leena ElDeeb, Research Analyst at 21Shares. “Today’s jobs report came in saying that businesses are paying higher than expected. However, non-farm payrolls were essentially unchanged – which could be a result of the deadly hurricanes many American cities have suffered from recently.”
“Historically, a reduction in rates tends to have a favorable impact on Bitcoin by lowering borrowing costs,” she added. “Consequently, as the high interest rate cycle ends, this market recovery will drive more interest toward Bitcoin, as it still holds as a long-term hedge against currency debasement. The upcoming peak in interest will coincide with the promising outcomes of the exciting developments on Bitcoin's blockchain.”
With market watchers now certain that the Fed will cut rates, risk-on sentiment returned, helping to boost Bitcoin (BTC) following Thursday’s sell-off that saw its price drop nearly 5% and retest support at $69,000.
BTC/USD Chart by TradingView
“The crypto market stumbled on the last day of October, losing over 5.5% in 24 hours as investors turned to profit-taking,” said Alex Kuptsikevich, chief market analyst at FxPro. “The drop coincided with the stock market entering a period of high uncertainty ahead of a mix of influential events: the NFP on Friday, the US election results on Wednesday, and the Fed meeting on Thursday.”
“The total crypto cap rolled back to $2.33 trillion, where the market consolidated in the 10 days to 25 October,” he noted. “While painfully sharp, it fits well with the upward trend that has been building since early September.”
“After an impressive and rather unexpected attack on all-time highs, Bitcoin is now in news-waiting mode, ready to move either way from current levels. There will be no shortage of volatility and sharp reversals,” Kuptsikevich warned. “At the end of October, Bitcoin was up 9.7% at $70K. In terms of seasonality, November is considered a successful month for BTC. Over the past 13 years, Bitcoin has ended the month with a gain 8 times, with an average rise of 22% and an average fall of 17%.”
Thursday’s sudden drop in price sparked a wave of panic selling by short-term Bitcoin holders, who sent around 32,000 BTC, worth roughly $2.3 billion, to cryptocurrency exchanges and sold them on the open market. This intensified the sell-off, causing BTC to briefly dip to $68,767.
This was the highest level of panic selling since the August 5 yen carry trade unwind, but once the selling dissipated, BTC rebounded above $70,000 for a positive close to the month.
With Bitcoin closing October in the green, TradingView analyst Alan Santana noted that this is “the first time Bitcoin has closed two consecutive months green since it peaked in March. Before this month, we saw an alternating pattern of one month red and another green.”
That said, he warned that the “current monthly session is producing a double-top pattern,” as “the month closed below March's 2024 wick high and session close.”
“In March, the monthly RSI closed at 76. In October, very close to the same price, the RSI closed at 66,” he highlighted. “There is an interesting signal with the weekly RSI; in March, it closed at 88 when it peaked, but currently, the RSI reads 59.90, a very strong bearish divergence.”
“The MACD is pretty standard for a rise with a curve starting to develop and a dropping histogram since March 2024,” he added. “The weekly MACD is showing a strong bullish cross. October produced a neutral candlestick pattern.”
As for whether the outlook is bullish or bearish, Santan noted that a “double-top pattern is a reversal signal. Ultra-low volume is bearish. It can happen that trading volume is still low because the real action is yet to start. But so far, it is a sign of weakness.”
“Bitcoin's chart is mixed as usual, and it is extremely hard to predict the next move,” he said. “This is normal, and we shouldn't expect it to be easy because many people are looking at Bitcoin, and it becomes complex to know what happens next.”
“When Bitcoin stops and consolidates, goes sideways and we enter a doubt zone, we can always look at the Altcoins to know how the next move will develop,” he noted. “In the last three months, when Bitcoin would stop and hit resistance, the Altcoins were growing massively, 200-300%. When the Altcoins are growing, this is a bullish sign for Bitcoin. [When they are] all crashing, we know that Bitcoin is set to move down because the market is one.”
Based on the latest price trends, Santana said Bitcoin is “likely to enter a correction before hitting a new major high. A new major high would be the next Fib. extension level around 102,000. For this level to hit, we are likely to experience a correction first, and this correction can be something surprising for most participants.”
“Just as the market grows beyond expectations when bullish, it does the same when bearish,” he concluded. “Just as it removes all barriers and shoots up extremely high, when correction times come, it will go deeper enough to liquidate 95% of all longs.”
At the time of writing, Bitcoin trades at $71,055, an increase of 0.28% on the 24-hour chart.
