The recent rise in bitcoin prices, which defied previous expectations, has intrigued cryptocurrency enthusiasts and financial experts alike. While the narrative around the impending launch of bitcoin spot exchange-traded funds (ETFs) has attracted significant attention, a new report from QCP Capital suggests that macroeconomic factors are the main driving force behind the rally.
The report It also highlights the impact of recent jobs data on the Federal Reserve’s stance, leading to a 95% chance that interest rates will remain unchanged in December.
Source: QCP Capital
The rise of bitcoin: a macroeconomic story
Contrary to the popular belief that bitcoin‘s rally is solely attributed to the anticipation of spot ETFs, experts such as Greg Magadini of QCP Market and CTF Capital argue that broader macroeconomic forces are at play.
bitcoin‘s ability to maintain its price around $35,000 has been fundamental in this regard. This stability was achieved following the release of crucial employment data, which, in turn, influenced the Federal Reserve’s monetary policy decisions.
Last week’s payroll data brought a mixed bag of news. While the unemployment rate rose to 3.9%, wage growth saw a softer growth rate than expected. Job creation in October also slowed to 150,000, following an impressive gain of 297,000 jobs in September.
These crypto-experts-believe-bitcoin-surge-driven-by-macroenvironment-not-just-by-spot-etf-appro” target=”_blank” rel=”noopener nofollow”>labor market dynamics have created an interesting dynamic in the broader financial landscape. The Federal Reserve, which had been contemplating raising interest rates, is now reconsidering its stance due to uncertain economic indicators.
BTCUSD trading at $34,862 on the 24-hour chart. TradingView.com
Revised Federal Reserve Rates
He CME FedWatch Tool It now indicates that traders have assigned a 90.2% probability that the Federal Reserve will maintain its current interest rates in December. This marks a significant change from the 80% probability before the payroll data was released. The reasons behind this change are twofold.
First, a lower-than-expected Treasury supply estimate in the first quarter, combined with a dovish statement from the Federal Open Market Committee (FOMC), have sent bond yields tumbling.
Second, this drop in bond yields has, in turn, led to a rise in risk assets, including cryptocurrencies.
Source: CME Group
The link between jobs and bitcoin
The link between labor market data and bitcoin may not be immediately evident, but it is significant. The Federal Reserve’s interest rate decision has a substantial influence on financial markets, including coins. A stable interest rate environment can be favorable for risk assets as it can encourage investment.
Therefore, the recent jobs data, which appears to have prevented the central bank from raising rates, has resulted in a positive development for bitcoin and other cryptocurrencies.
At the time of writing this article, the current price of bitcoin, according to bitcoin” target=”_blank” rel=”noopener nofollow”>CoinGecko, stands at $34,920, with a gain of 0.2% in 24 hours and a rise of 1.9% in seven days. The coming weeks will undoubtedly be crucial as market participants eagerly await the Federal Reserve’s next move and the evolving macroeconomic outlook.
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