Bitcoin Awaits NFP After Rate Hike Odds Drop to 40%

BTC bounces off $82K, challenging the previous peak at $87K

Bitcoin started October on a bullish note, briefly piercing $85,000 after the US PCE Price Index showed that inflation is softer than anticipated. This increased the appeal of risk assets such as cryptocurrencies and lowered the odds of an October rate hike to 40% at the time of writing, according to the CME FedWatch tool. Just one week ago, the rate increase odds stood at 70%, so the drop is significant.

However, Bitcoin’s momentum subsided soon after the initial push, and the price dropped in the $83,000 area. The US GDP showed improvement, signalling that the economy is capable of absorbing another rate increase.

Institutional flows have been mixed throughout the week, with Coinglass data showing small inflows for the first days (+$97 million combined), which were followed by a day when $148 million exited the Bitcoin spot ETFs.

The next major catalyst is the Non-Farm Payrolls report (NFP), which is due later today. The jobs data could trigger a change in the rate hike odds, which would have a strong impact on the crypto market. The forecast for today’s NFP is 89K new jobs, and a lower number could deter the Fed from further tightening (higher rates are detrimental to job creation). On the other hand, a higher number of jobs would increase the rate odds and would hurt Bitcoin’s bullish stance.

Chart Analysis – BTC/USD

The year’s price action created a double top at $82,000, which was broken on September 21. A break of a double top is a very bullish sign, and usually, the level turns into support. Now that Bitcoin’s price has already pulled back to this level and bounced higher, the next medium-term direction will depend on the break of the previous high.

If we see a break of $87,000, then BTC may be headed towards $90,000, which is a major psychological level. A failed break of $87,000 would nullify some of the bullish momentum, but it wouldn’t necessarily mean that a crash will follow.

The RSI is trading at roughly 65, without being overbought; the value is not extreme, so it’s no cause for concern. The 50-day MA is already above the other two MAs, and the 100-day MA (yellow line) is angled upwards, possibly getting ready to move above the 200-day MA (red line). If this happens, the position of the three MAs will indicate a full-on uptrend.