Bitcoin Could Experience Volatility as US Jobs Report Looms

Bitcoin Could Experience Volatility as US Jobs Report LoomsBitcoin and other major digital tokens could experience volatility in tandem with stock market reactions to the upcoming key US jobs report. Data reveals that the correlation between an index tracking the 100 largest digital assets and the MSCI World index sits at a 30-day correlation of close to 0

Bitcoin Could Experience Volatility as US Jobs Report Looms

Bitcoin and other major digital tokens could experience volatility in tandem with stock market reactions to the upcoming key US jobs report. Data reveals that the correlation between an index tracking the 100 largest digital assets and the MSCI World index sits at a 30-day correlation of close to 0.60, one of the highest in the past two years.

Investors are on edge about the jobs data, as uncertainty lingers over whether the US is experiencing an economic slowdown and what rate cuts the Federal Reserve might subsequently implement. Last month's jobs report unexpectedly showed weakness, triggering turbulence across global markets, including a sell-off in the crypto space. Currently, the market expects an increase of 165,000 in nonfarm payrolls for August, with the unemployment rate remaining at 4.2%. The outcome of this report will offer vital insights for investors about the US economic landscape and the direction of Fed policy.

"Bitcoin's reaction to macro events is highly correlated to equities," pointed out Benjamin Celermajer, co-chief investment officer of MagnetCapital. He mentioned that market sentiment has been "pretty bad" over the past two weeks, with $55,000 being a crucial support level for Bitcoin to watch. As of press time, Bitcoin was up about 0.35%, trading at $56,372, down approximately $17,000 from its all-time high in March. Smaller tokens like Ethereum and Solana also saw slight gains.

The volatility in US stock index futures underscores the need for caution in the market ahead of the August nonfarm payrolls release. Earlier this year, inflows into US spot Bitcoin exchange-traded funds (ETFs) fueled the rally that propelled the largest digital asset to its record high. However, the bull run has since faded, with ETFs experiencing outflows in recent days.

"The details of tonight's jobs report will be everything," stated Cici Lu McCalman, founder of blockchain consultancy VennLinkPartners. She highlighted that a risk is if the data proves strong enough to curb market expectations for Fed rate cuts. Loose monetary policy is generally regarded as favorable for speculative assets like cryptocurrencies. Predictors anticipate the jobs data to show a rebound in hiring and a slight dip in unemployment, potentially signifying stabilization in the economy after July's data triggered growth fears.