Bitcoin Price Prediction: Can NFP Data Provide the Next Catalyst?

Bitcoin is edging higher above $78,000 as investors look cautiously ahead to Friday's nonfarm payroll report, which could influence expectations for the Federal Reserve's rate decision later this month.

After jumping 25% in August, Bitcoin is holding steady at the start of September, a month that has historically been one of the weaker months for Bitcoin performance. Although the past three Septembers have produced positive gains.

The market is in a wait-and-see mood ahead of tomorrow's crucial nonfarm payroll report, as traders await clearer signals from U.S. data. The report will be a key test of whether markets maintain elevated September Fed rate-hike expectations.

What to expect from the NFP report?

Expectations are for 43,000 jobs to be added after 23,000 were lost in July. Unemployment is expected to remain unchanged at 4.1%, and average wage growth is projected at 0.3% MoM, up from 0.1%.

Data yesterday showed private payrolls increased by 38,000, below the 48,000 economists expected. The JOLTS job report also showed that hiring remained weak ahead of the nonfarm payroll report.

U.S. job openings rose by 89,000 to 7.27 million, but hires fell by 278,000 to 5.05 million. This suggests that while employers continue to advertise positions, fewer vacancies are resulting in actual hires.

Together, these data points support signs of a cooling labour market.

Tomorrow's data comes as the market prices in a 61% likelihood of a rate hike in September by the Federal Reserve. This is up from around 35% last week after Federal Reserve Chair Kevin Warsh adopted a hawkish stance at Jackson Hole.

A weaker-than-expected NFP report could see markets rein in September rate hike expectations. This could pull the U.S. dollar lower and boost risk assets such as Bitcoin, which often performs better in lower interest rate environments.

However, given last month's weak NFP report, the bar is low for a rebound. A stronger-than-expected report could add to Fed rate hike expectations at a time when inflation remains sticky, and oil prices are elevated.

More BTC holders in profit, ETF demand wavers after strong August

Meanwhile, the flat price action comes amid signs of resilience in Bitcoin holdings. Around 68% of all Bitcoin in circulation is in profit despite global macro uncertainty.

At the same time, demand for Bitcoin ETFs is showing some signs of wavering after strong inflows of $3.5 billion across August.

A combination of profitable BTC supply but less consistent ETF demand shows a market which is resilient but maybe lacking a catalyst to extend gains in the near term. All eyes are on tomorrow’s data for further clues.

BTC technical analysis  

  After breaking above the 50 EMA, Bitcoin rallied through the 200 EMA before running into resistance at $81.5K and easing back. The price is currently consolidating above $77K and the 78.6% Fibonacci retracement of the $57.7K–$82K move. The consolidation has also taken the RSI out of overbought territory, leaving room for further gains.

Buyers will look to break above $81.5K, the August high, and $82.8K, the May high, to extend gains towards $90K, the psychological level. Above here, attention turns to $95K and then $100K.

On the downside, immediate support is seen around $76.2K, yesterday’s low. A break below this level would bring $73.4K, the 61.8% Fibonacci retracement, into play, followed by the 200 EMA at $72.2K. Below here, sellers could gain traction towards $70K, the 50% Fibonacci retracement, and the 100 EMA, before attention turns to $65K. 

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