Bitcoin Clings to $22K as Dollar Strength Rises to December Levels — What’s Next?
Bitcoin (BTC) fell to a three-week low on March 8 as stronger-than-expected US employment data dampened risk assets.
Employment stats boost Fed hawks, BTC price falls
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD down to $21,858 on Bitstamp.
The pair was trying to preserve $22,000 as support at the time of writing, with traders’ downside target still a long way off at $21,300.
“Bitcoin is not showing the strength I initially wanted to see (a small bounce yesterday took place),” Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, in summary.
“If so, you’re looking for some more downward momentum towards a sweep of the $21.2K lows before a reversal takes place. If we want $30,000, a reversal of $23,000 is needed.”
Other trading account Daan Crypto Trades, meanwhile, argued that the volatility was due to movements in the Bitcoin futures markets.
“Massive bidding depth on the Binance futures pair. Combined with quite the uptick in Open Interest,” he revealed on the day.
“Remember that walls can be deceptive as they can be pulled at any time. It feels like a bigger move is coming from any direction.”
Macro events produced mixed results in moving crypto markets.
An appearance by Jerome Powell, chairman of the Federal Reserve, before the US Congress the previous day failed to provoke any reaction, but the day’s jobs data sent sentiment down.
“Expectations were 197,000 employees. The actual figure is 242K, which is more positive than expected,” van de Poppe wrote in a section of comments on today’s non-agricultural employment increases.
“For risk-averse investors, it’s not good, as we’ve just heard that Powell wants to raise rates more in 2023.”
Such “hot” employment numbers traditionally confound risk assets as they suggest the Fed has more leeway to keep financial conditions tighter for longer.
Dollar breaks two three-month highs
Estimates of how far the Fed would hike at the next meeting of its Federal Open Market Committee (FOMC) on March 22 evidenced the growing uncertainty surrounding falling inflation.
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Instead of 25 basis points as in February, the market now favored a larger rate hike of 50 basis points, according to data from CME Group’s FedWatch Tool.
The US Dollar Index (DXY) also had a potential unwelcome surprise for Bitcoin bulls.
After a strong session on March 7, the index consolidated the following day to reach 105.88 – the highest level since December 1, 2022.
“Look at the DXY … it’s a near perfect setup for a negative diverging higher high above 106, so at least a big pullback, or the dump below 100 has begun,” investor David Brady reacted.
The views, thoughts and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.