Bitcoin Bulls Thrive as Payroll Data Boosts Confidence, According to Crypto Analyst

In the realm of economic indicators, recent trends in the Consumer Price Index (CPI) and hourly earnings have not gone unnoticed. According to Greg Magadini, a prominent figure at Amberdata, these improvements offer the Federal Reserve some breathing room to maintain a cautious monetary policy stance.

However, the release of the U.S. nonfarm payrolls (NFP) report last Friday painted a less-than-rosy picture for Bitcoin (BTC). The cryptocurrency has struggled to gather substantial upward momentum in the wake of disappointing numbers. Despite this, market sentiment remains surprisingly upbeat, with many interpreting the lackluster data as a sign that the era of Fed tightening may be drawing to a close.

Greg Magadini, who serves as the Director of Derivatives at Amerdata, is unreservedly bullish on BTC. He points to the figures from Friday's payrolls report and the recent decline in stock market volatility indices as potential catalysts for continued gains in the cryptocurrency.

The Labor Department's latest employment report for October brought some sobering news. Job creation slowed significantly, with only 150,000 jobs added compared to the 297,000 in the previous month. Simultaneously, the unemployment rate inched up to 3.9%, and wage growth, as measured by average hourly earnings, showed signs of softening, hinting at an enduring trend of disinflation.

This data shift makes it increasingly likely that the Federal Reserve will refrain from further interest rate hikes. This development is generally seen as favorable for risk assets, including cryptocurrencies. Since March of the previous year, the central bank has implemented a series of rate hikes totaling 525 basis points, bringing the rate to 5.25%. This tightening policy, aimed at curbing inflation, played a notable role in last year's downturn in the crypto market.

Magadini also noted, 

"This NFP print was also accompanied by revisions lower for both September (+336k → +297k) and August (+227k → +165k). We're also seeing positive trends in the CPI and hourly earnings, allowing room for the Fed to maintain a dovish tone."

Adding further weight to the case for continued upward movement in Bitcoin is the decreasing volatility in U.S. stock and bond markets. The S&P 500 VIX indicator has plummeted from 21.13 to 14.19 over the past five trading days. Simultaneously, the MOVE index, a measure of volatility in the Treasury bond market, dropped from 132 to 118, as reported by the TradingView platform. It seems that geopolitical tensions in the Middle East have taken a backseat in terms of market-driving news.

The reduced volatility in traditional markets, particularly in bonds, eases liquidity concerns on a global scale, providing an incentive for investors to take on more risk.

Magadini concluded, 

"The Middle Eastern war (something beyond my understanding) seems to have taken a backseat in terms of market-driving news. I expect a continuation of the relief rally for risk assets. Especially given the massive drop in VIX and VVIX week-over-week and the classic end-of-year rally narrative that traders look for in Q4."

As of the latest update, Bitcoin is trading at $34,890, marking a 0.4% decline for the day. Over the past four weeks, prices have surged by nearly 25%, briefly surpassing $36,000 at one point.

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