Bitcoin continues to trade in a tight range between $18,000 and $25,000, keeping investors on the lookout for where the price will go next. The Crypto market is plagued by a number of problems, from collapsed projects to bankruptcies.
Nurphoto | Getty Images
Price bitcoin fell below $23,000 over the weekend as investors digested the latest U.S. jobs data and looked ahead to a series of speeches by members of the Federal Reserve.
According to Coin Metrics, bitcoin fell to $22,655 early Monday morning, its lowest level since Jan. 31, after breaking above $24,000 on Thursday. It last traded down less than 1% at $23,039.37.
Bitcoin is down 0.4% for the month. However, it is still up 39.1% in 2023.
Meanwhile, ether fell to $1,610.21 on Monday. It was last higher by 1.7% to $1,646.12.
Bitcoin’s 2023 rally is tiring
Strong labor market
“Bitcoin continues to lose momentum after a stronger-than-expected January jobs report sent the market gearing up for two more rate hikes,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.
“Bitcoin has survived a week filled with major events and economic data while holding the price around $23,000, but the market may have run out of reasons to buy the coin and may be subject to profit-taking sell orders this week,” he said.
On Friday, the Labor Department reported the strongest nonfarm payrolls gain of 517,000 in January, well above the Dow Jones estimate of 187,000 — since July and a 53-year low in the unemployment rate. After the numbers were published, Treasury yields rose and US dollar index followed – both of which tend to move inversely with crypto.
The report “dealt a blow to anyone who expected the Fed to cut rates soon,” said Noelle Acheson, an economist and author of the Crypto is Macro Now newsletter. “Employment growth and the official unemployment rate falling to the lowest level in 50 years suggest that this scenario is still a long way off and remind the market that the Fed has no other reason to cut rates.”
“Expectations are shifting toward more tightening and higher rates (which the Fed has been talking about all along), which is not good for risk assets,” she added.
Waiting for the crypto rollback
For several investors and analysts, the crypto market is showing a bullish trend and probably bottomed out at $17,000 in December, but is likely to stall at least once more before starting a bigger rally.
According to Wolfe Research, Bitcoin is trading “at its highest overbought level in two years” and “should be checked.”
Many believe that the macro environment will continue to be a big challenge for risk assets, including crypto. In 2022, the ratio of crypto to stocks was at an all-time high, and this trend is unlikely to end.
Fed Chairman Jerome Powell is scheduled to speak at the Economic Club of Washington on Tuesday, and several other members of the Fed will make speeches this week.
“Given last week’s failure to fully reduce bullish market rate forecasts, Fed members will likely continue to remind the market that the Fed funds rate will rise above 5% and remain at that level throughout the year,” Hasegawa said.