Bitcoin falls below 67k with NFP in focus

Bitcoin is under pressure once again on Wednesday, breaking below the short-term consolidation pattern to 66.5K at the time of writing.

The largest cryptocurrency has declined 3.5% over the past 24 hours and is 12% lower over the past seven days. The sell-off is not confined to BTC; altcoins are also a sea of red. The total crypto market capitalisation has declined 3.2% over the past 24 hours to $2.27 trillion.

The latest price moves come ahead of the highly anticipated January non-farm payroll report, which was delayed from last Friday due to the brief U.S. government shutdown.

What to expect from the NFP report

Expectations are for the non-farm payroll to show 70,000 jobs were created in January, up from 50,000 in December. Meanwhile, the unemployment rate is expected to rise from 4.4% to 4.5%. Recent JOLTS job openings, Challenger job cuts and ADP payrolls suggest that the NFP could be weaker than expected.

The jobs data could provide some clues about the Federal Reserve's next move. Softer-than-expected labour market data could lift expectations for Fed rate cuts, which currently stand at 60 basis points by the end of the year.

At the December FOMC meeting, the Fed signalled just one rate cut this year. Furthermore, the new Fed Chair, Kevin Warsh, was the least dovish of Trump’s shortlist, reinforcing expectations that policy could remain paused for longer.

AI disruptions a headwind for BTC?

While a weaker-than-expected nonfarm payrolls report could support crypto in the near term, larger themes are also weighing on BTC. A recent Grayscale report showed Bitcoin's performance has closely mirrored that of software stocks in the S&P 500 over the past 18 months. Software stocks have fallen sharply in recent weeks on concerns of AI disruption, creating a headwind for BTC. 

  However, it's also worth noting that the AI trade has been absorbing a disproportionate share of global capital, often at the expense of other asset classes, including cryptocurrencies.  

Institutional demand steadies after recent weakness

Finally, institutional demand for ETFs has remained weak. US BTC has seen weak demand with three straight months of net outflows. While ETFs are on track to record net inflows this week, demand would need to pick up and persist to support a recovery in BTC. Looking ahead, until liquidity expectations improve and institutional flows turn decisively positive, rallies are likely to remain corrective rather than structural. 

BTC technical analysis 

BTC/USDT tumbled to a low of 60k on Friday before rebounding to retest the daily resistance at 73k on Sunday. The price then consolidated around 70k. However, the price is breaking down that consolidation below 68k, keeping bears in the driving seat. This brings 60k back into play. Below 60k a lower low is formed, bringing the 50k psychological level into focus Buyers would need to rise above 72k to bring 75k back into focus. However, a rise above 85k is needed to negate the near-term downtrend. 

Read more from PrimeXBT

Disclaimer: The content provided here is for informational purposes only and is not intended as personal investment advice and does not constitute a solicitation or invitation to engage in any financial transactions, investments, or related activities. Past performance is not a reliable indicator of future results. The financial products offered by the Company are complex and come with a high risk of losing money rapidly due to leverage. These products may not be suitable for all investors. Before engaging, you should consider whether you understand how these leveraged products work and whether you can afford the high risk of losing your money. The Company does not accept clients from the Restricted Jurisdictions as indicated on its website / T&Cs. Some products and services, including MT5, may not be available in your jurisdiction. The applicable legal entity and its respective products and services depend on the client’s country of residence and the entity with which the client has established a contractual relationship during registration.