Bitcoin clings to $22K as US dollar strength rises to December levels — What’s next?
Bitcoin (BTC) fell to three-week lows on March 8 as stronger-than-expected employment data from the United States dampened risk assets.
Employment stats boost Fed hawks, BTC price dips
The pair was attempting to preserve $22,000 as support at the time of writing, with traders’ downside targets still a way off at $21,300.
“Bitcoin not showing the strength I initially wanted to see (slight bounce yesterday taking place),” Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, summarized.
“In that case, looking for some more downwards momentum towards a sweep of the lows at $21.2K before a bounce takes place. If we want $30K, flip $23K is necessary.”
Fellow trading account Daan Crypto Trades meanwhile argued that volatility was due thanks to movements in Bitcoin futures markets.
“Massive bid depth on the Binance futures pair. Combined with quite the ramp up in Open Interest,” he revealed on the day.
“Keep in mind that walls can be deceptive where they can be pulled at any moment. Feels like a bigger move is coming regardless of direction.”
Macro events offered mixed results when it came to moving crypto markets.
An appearance by Jerome Powell, Chair of the Federal Reserve, before the U.S. Congress the day prior failed to spark a reaction, but jobs data on the day sent the mood downhill.
“The expectations were 197K in employed people. The actual number is 242K, which is more positive than expected,” Van de Poppe wrote in part of comments on the day’s non-farm employment increases.
“For risk-on investors, not great, as we’ve just heard that Powell wants to increase interest rates more in 2023.”
Such “hot” employment figures traditionally unsettle risk assets as they imply that the Fed has more leeway to keep financial conditions tighter for longer.
Dollar blasts two three-month highs
Estimates on how far the Fed would hike at the next meeting of its Federal Open Market Committee (FOMC) on March 22 evidenced the increasing uncertainty over declining inflation.
Instead of 25 basis points as in February, the market now favored a larger 50-basis-point rate hike, according to data from CME Group’s FedWatch Tool.
The U.S. dollar index (DXY) likewise held a potential unwelcome surprise in store for Bitcoin bulls.
After a strong session March 7, the Index consolidation on the day after hitting 105.88 — its highest levels since Dec. 1, 2022.
“Watch the DXY… there’s a near perfect set-up for a negatively divergent higher high above 106, then at least a big pullback, or the dump below 100 has begun,” investor David Brady reacted.
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