Bitcoin remains depressed as dollar rallies past nonfarm wages in the United States

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Bitcoin is trading under pressure as currency markets assess the outlook for an optimistic US non-farm payroll release, which could amplify concerns of an early unwinding of Federal Reserve stimulus measures .

The major cryptocurrency changes hands near $ 33,000 at press time – down 1% on the day – after being jettisoned above $ 36,000 earlier this week. Retirement has poured cold water on the optimism generated by last week’s rebound from $ 28,800 to $ 35,000.

The dollar index, which tracks the value of the greenback against major currencies, hit a three-month high of 92.60 shortly before the time of release.

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The index has been rising since June 16, when the Fed unexpectedly advanced the timing of the first interest rate hike to 2023 and rose 100 pips this week alone, according to data from TradingView.

According to City Index, the London-based currency and spread betting provider, the recent DXY hike points to a high payroll figure.

Wage data, due for release at 12:30 p.m. UTC (8:30 a.m. ET) on Friday, is expected to show the US economy added 700,000 jobs in June, up from 559,000 in May. The unemployment rate is expected to drop to 5.7% from 5.8%, while wage growth may have slowed, according to FXStreet.

A higher than expected number would validate the Fed’s recent hawkish turn, possibly causing more pain for the price of bitcoin and other assets in general.

Related: Investors Who Are Taking Confidence In Grayscale Bitcoin Could Boost The Market

The Fed’s tightening – that is, raising interest rates or unwinding liquidity-boosting asset purchases – makes the dollar more attractive and dilutes the attractiveness of inflation hedges like the US dollar. ‘gold and bitcoin. As such, fears of a Fed slowdown or a gradual unwinding of stimulus measures tend to weigh on bitcoin and other risky assets. Likewise, the cryptocurrency could be the subject of a strong bid if the payroll data falls far below estimates, crushing the Fed’s taper fears.

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For example, bitcoin fell sharply to $ 30,000 in May after the United States signaled a sharp rise in inflation, forcing investors to consider the possibility of the central bank shutting off the liquidity tap earlier than expected. .

Before that, the cryptocurrency was on a solid upward trajectory, rising from $ 10,000 to over $ 60,000 in seven months through April, mainly thanks to the central bank stimulus. The Fed began pumping unprecedented amounts of liquidity into the system in March 2020 to help the economy and markets absorb shocks resulting from the coronavirus pandemic.

Also Read: Bitcoin’s Slippery Buy Ratio Indicates Weakening Bearish Sentiment: Analysts

The price action seen over the past 12 months tells us that bitcoin’s fortunes are closely tied to central bank money printing.

Crypto market indicators paint a mixed picture ahead of the event. While the sliding open interest rate of sell calls gives bullish hints, low active user participation on the blockchain signals low demand.

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