Bitcoin week ahead Ep09: Watch out NFP report on Friday

Apologies mates! I was jammed in my headspace this Monday following a mind-boggling weekend. That explains the delay in my Bitcoin weekly outlook. Thanks for sticking around.

Yerevan (CoinChapter.com) — Bitcoin posted an incredible rally over the weekend, held on to its gains on Monday, and continued trending upward on Tuesday, setting itself en route to higher price levels for the rest of the week.

The BTC/USD exchange rate reached $36,449 on Tuesday after rising more than 5%. However, its profits emerged apprehensively because of a weaker US dollar sentiment. The dollar index against a basket of foreign currencies plunged as investors shrugged off the Federal Reserve’s hawkish tone at the last week’s FOMC policy.

Also read: Bitcoin week ahead Ep07: Let’s focus on the inflation-centric FOMC meeting

Bitcoin rose, and the dollar also declined after mixed inflation reports at the end of last week. The Fed’s preferred inflation metric rose to 3.4% to reach its highest levels in three decades. Meanwhile, the month-over-month decline supported the argument that inflation might be topping out. Nevertheless, the inflation outlook remains unclear for the time being.

As a result, doves are still in control, helping safe-havens like Bitcoin maintain their key support ranges (~$30,000) even after drastic price crashes (more than 50% after hitting almost $65,000 in mid-April 2021). That further explains the underlying weakness in the US dollar, whose purchasing power would likely drop if commodities prices increase due to inflation.

The 10-year Treasury yield stands stuck inside the 1.40-1.75% range since March. True, the rangebound returns suggest a breakout is underway. The Fed’s easy monetary policy, accompanied by robust US economic growth, might continue to drive yields upward. That could sap investors’ appetite for riskier safe-havens like Bitcoin.

FOMC data

The most influential economic release for Bitcoin this week will be the June non-farm payroll (NFP) report. Economists expect that the US would report further growth in the labor sector, with a median estimate lurking at 695,000. As a result, the Fed wants to continue its expansionary policy, including near-zero interest rates and an open-ended bond-buying program until it achieves maximum employment.

The US central bank now has roughly 10 million jobs to fill.

Read more: Bonds plus Bitcoin: The combo you need to survive higher inflation

That said, loose monetary policy would continue to stay around to provide bullish tailwinds to the Bitcoin market. Meanwhile, the cryptocurrency will need to fight its own demons, especially as global regulators increase their scrutiny over the crypto sector, beginning with China’s latest ban.

Key Bitcoin levels to watch

Barring aside technical indicators, the BTC/USD exchange rate is now more about maintaining a super stubborn price range, defined by $30,000 as support and $40,000 as resistance.

Traders will likely stick to their intra-range strategy this week as well, i.e., entering a long trade towards $40,000 on a bounce from $30,000 or support levels above it, and entering a short position on a pullback from $40,000 or nearby levels with $30,000-32,000 in mind as a downside target.

Have a safe week!