Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Bitcoin’s recent rally, which briefly pushed its price above $113,000, quickly reversed course following the release of weaker-than-expected U.S. jobs data. The U.S. Nonfarm Payrolls report for August showed a significant slowdown in job creation, impacting market sentiment and causing the cryptocurrency to slide back below key resistance levels, despite underlying on-chain data suggesting a buildup of “dry powder” on exchanges.
The August Nonfarm Payrolls report revealed a mere 22,000 jobs added, falling considerably short of the 75,000 jobs anticipated by economists and July’s revised figure of 73,000. Additionally, the unemployment rate edged up to 4.3%, aligning with expectations but higher than the previous month’s 4.2%, while year-over-year wage growth decelerated to 3.7% from 3.9%.
For risk assets such as Bitcoin, a softer labor market typically reinforces the argument for potential interest rate cuts by the Federal Reserve. With odds for a Fed rate cut currently at 88.2%, the report’s findings underscore cooling inflationary pressures, potentially leading to increased liquidity injections. Historically, lower interest rates and a weakening U.S. dollar tend to provide a positive impetus for cryptocurrency markets.
On-Chain Indicators Signal Preparedness
On-chain data indicates that market participants may have anticipated such an outcome, with stablecoin inflows to exchanges surging by over $2 billion a day prior to the jobs report. This influx of liquidity, often referred to as “dry powder,” is historically seen as funds positioned for potential rotation into Bitcoin and Ethereum once a clear catalyst emerges.
Concurrently, Bitcoin’s open interest has climbed to over $80 billion, nearing all-time highs, even as its price consolidated around $110,000. This suggests that leveraged positions are accumulating rather than unwinding, pointing to a potential for increased volatility driven by building market interest.
Market Reaction and Short-Term Outlook
Following the release of the weaker NFP data, Bitcoin initially moved higher but swiftly reversed, dropping 1.5% shortly after the New York session opened. This pullback pushed BTC back below $111,000, retesting a critical supply zone positioned between $112,500 and $113,650.
Such abrupt intraday price movements often result from early long liquidations, with over $63 million in leveraged positions reportedly erased within a few hours. This activity can also be attributed to potential stop-hunting by market makers, who capitalize on crowded positioning before re-establishing a trend direction.
Despite this setback, the one-hour chart structure for Bitcoin remains constructive, exhibiting a pattern of higher highs and higher lows—a classic indicator of an uptrend. Unless Bitcoin decisively closes below $109,500, the short-term bullish structure is considered intact, suggesting the recent dip may be more of a liquidity sweep than a genuine shift in trend.
Longer-Term Confirmation Awaits Weekly Close
From a higher time-frame perspective, a more cautious stance is warranted, as it is premature to declare a confirmed market bottom with two days remaining until the weekly close. A definitive weekly close above $112,500 would significantly strengthen the argument that a durable price base has formed near $107,500.
Until this key weekly close is achieved, the broader market remains in a transitional phase, navigating the interplay between macro-driven optimism and localized supply pressures. While the lower-timeframe bias leans bullish, confirmation of a lasting market bottom hinges on Bitcoin’s ability to hold above critical resistance levels by the end of the week.
