Key Points
- Bitcoin (BTC) saw a 5% rise on May 3 following US employment data.
- The weaker than expected US nonfarm payrolls data for April could lead to interest rate cuts.
On May 3, Bitcoin (BTC) experienced a 5% increase. This was largely attributed to the release of US employment data, which indicated a potential boost for risk assets.
Bitcoin Price and US Employment Data
The sudden shift in Bitcoin’s price pushed it past $62,000 on Bitstamp, following the release of the US nonfarm payrolls data for April. This data was significantly lower than anticipated, hinting at potential weaknesses in the labor market. This could potentially strengthen the argument for interest rate cuts.
Federal Reserve Chair Jerome Powell stated on May 1 that the current target range for the federal funds rate would be maintained for as long as necessary. He also mentioned that the Federal Reserve was prepared to respond to any unexpected weakening in the labor market.
Market Response
The data release led to an immediate sigh of relief in the stock market, with Dow Jones futures seeing a surge of 500 points. However, questions arose regarding how the Federal Reserve would handle potential inflation issues in the future.
The latest estimates from CME Group’s FedWatch Tool put the odds of a rate cut at the June meeting of the Federal Open Market Committee (FOMC) at just below 15%. The odds for a minimal 0.25% cut at the July meeting were 33%.
In response to the Bitcoin price increase, analysts expressed hope that the higher levels would hold as support. This would render the week’s dip to two-month lows as a mere knee-jerk reaction.
Bitcoin’s New Era
Bitcoin had initially faced difficulties reclaiming the $60,000 mark. However, traders are now watching the level near $62,000 to see if Bitcoin can reclaim it. Over the past year, Bitcoin has often broken below support on higher time frames, only to reclaim it soon after.
Ki Young Ju, founder of on-chain analytics firm CryptoQuant, revealed that the area below $60,000 had been a popular one for “buying the dip”. He commented that Bitcoin whales had accumulated 47K BTC in the past 24 hours, indicating a new era for Bitcoin.
