The January nonfarm payrolls data revealed a staggering figure of 353,000, nearly doubling the anticipated 185,000, surprising both the market and analysts alike.
On February 2nd, Bitcoin saw a sudden decline as the Wall Street trading day commenced, marked by a significant $500 hourly candle dip reported on Bitstamp.
This unexpected drop was directly linked to the release of the United States unemployment data, which unveiled a surprising surge. January’s nonfarm payrolls figures came in at a staggering 353,000, nearly double the anticipated 185,000, catching both the market and analysts off guard.
The immediate market response suggested that the previously assumed negative impact of restrictive economic policies on the U.S. economy might be less severe than initially anticipated. This raised concerns that interest rates could remain elevated for an extended period, potentially reducing liquidity across various asset classes, including cryptocurrencies.
On January 31st, the Federal Reserve unanimously decided to maintain interest rates at their current levels, with Fed Chair Jerome Powell attempting to dispel speculation about rate cuts occurring in March.
The release of the jobless data further solidified the belief that a rate cut before May was improbable, leading to a decrease in the odds of such a move in March from 45% earlier in the week to 17.5%.
In response to the data, Caleb Franzen, the founder of Cubic Analytics, highlighted that revisions had actually increased the December job figures, suggesting that doubters of the economy were consistently proven wrong. Financial commentator Tedtalksmacro remained optimistic, asserting that strong employment data was beneficial in the long run, and the market had simply overreacted by prematurely pricing in rate cuts.
Additionally, the U.S. Dollar Index (DXY) surged to new 2024 highs, exerting further pressure on the cryptocurrency market.
Despite these challenges, there was some optimism for Bitcoin enthusiasts as outflows from the Grayscale Bitcoin Trust (GBTC), a recently launched spot Bitcoin exchange-traded fund (ETF), provided some relief.
Coinbase received 4,400 BTC in inflows on that day, a decrease from previous days and a significant drop from the peak of 25,000 BTC observed in January. Nonetheless, total net inflows reached $38 million, indicating sustained interest in cryptocurrencies.
In a volatile market shaped by economic data and monetary policy speculation, Bitcoin and other cryptocurrencies faced uncertainty and challenges, with traders and analysts closely monitoring every development.
