Key Insights
- Bitcoin has shown a strong correlation to macroeconomic trends for months now.
- One of the biggest macroeconomic events is set to hit the internet on 7 February from the US Labor Market.
- Analysts expect this report to feature an unemployment rate between 4.1% to 4.2%.
- This could help Bitcoin to perform well in February and March, just as it did last year.
- Any more breaks below the $100,000 mark could lead to further declines for Bitcoin towards $90,000.
Bitcoin appears to be highly sensitive to macroeconomic developments lately.
For example, the recent CPI data release caused a recovery for the cryptocurrency last week.
It turns out that another report could be on its way next week .
Here’s how the 7 February US Labor Market report could be a determining factor for Bitcoin’s performance between February and March.
The Impact of the US Labor Market Report
Why are updates like the CPI and Labor market reports so important when it comes to predicting the price performance of crypto?
One key reason for this is that these reports directly affect the strength of the US dollar.
As the dollar strengthens or weakens, investors either develop an appetite or an aversion to risk-assets like crypto.
In essence, knowing how a certain report affects Bitcoin could be important for entering (or exiting) the US Bureau of Labor Statistics is set to publish its latest labor market report on 7 February.
This report is expected to have a huge influence on Bitcoin’s price movement, especially considering how sensitive it has been lately, to macroeconomics.
The cryptocurrency has gained more than 10% so far in January, but seems to be struggling with clearing the $100,000 zone once and for all.
Analysts also continue to warn that if the cryptocurrency continues to flirt with the $100,000 zone, the bears might win at some point and crash the cryptocurrency down towards the $96,000 support level.
Bitcoin and Federal Reserve Policies
So far, analysts believe that the “sweet spot” for Bitcoin lies in the report showing an unemployment rate of around 4.1% to 4.2%.
Benjamin Cowen, CEO of Into the Cryptoverse weighed in on the conversation by stating that if unemployment remains within this range, the price of Bitcoin could repeat its performance from last year in both February and March.
On the flip side, if a significant shift in the unemployment rate occurs, it might be difficult for Bitcoin to sustain its momentum.
In the mean time, the markets continue to expect the next US interest rate cut to occur on 18 June, according to the CME FEDWatch tool.
How Could This Affect Bitcoin?
Earlier in the week, Bitcoin hit its 50-day EMA around $98,845, which helped it to retake the $105,000 zone.
At the time of writing, the cryptocurrency has taken a step backward to the $102,000 zone after a 2.27% decline on the daily timeframe.
Bitcoin has also taken back most of its gains over the last week, with a 2.35% loss on its weekly timeframe.
According to the charts, Bitcoin could be facing a critical period ahead.
If the cryptocurrency continues downward and breaks below the $100,000 zone once gain, it could signal the start of an even deeper correction.
This correction could take the cryptocurrency further down to the next demand zone around $90,000 where some bulls are guaranteed to buy in.
Overall, despite the inability to maintain the $100,000 mark, the daily chart’s RSI shows a current reading above the 60 mark, indicating that the bulls are in control.
Any Bitcoin recoveries from here could trigger a retest of its $109,588 all time high, where a break above would be a bullish signal for investors to jump in.
If the economic conditions are favorable from 7 February onwards, we might even see a new all time high this year.
Overall, investors mist be prepared for more consolidation, where Bitcoin could either rally to the upside or downwards.
The next few days will be important for Bitcoin, and investors are advised to keep a sharp eye out for any price changes.
