After the first half of November, due to the panic sale caused by the collapse of FTX, the third largest cryptocurrency exchange in the world, Bitcoin has stabilized in the last few days in the range between 15.6k and 17k dollars.
Last week, however, some interesting information pushed the leading cryptocurrency slightly above the upper limit of this range.
The ADP report published on Wednesday shows that despite the forecasts of 200,000 new jobs in November this year, The US economy created only 127,000 new jobs, which turned out to be significantly worse than last month's result (239,000)
Nela Richardson, a chief economist of ADP, points out that these data suggest the observed tightening policy by the Federal Reserve since March this year has a negative impact on job creation and wage growth.
The results indicating a deterioration in the condition of the US labour market, therefore, increase the likelihood that the Fed will decide to raise the federal funds rate at its December meeting by only 50 bps, which would signal that the Federal Reserve is approaching the end of the monetary policy tightening cycle, which in turn could be received by the cryptocurrency market with optimism and lead to a certain upward rebound.
These expectations were further fueled by the subsequent comments of Fed chairman Jerome Powell, who spoke at the Brooking Institution about inflation and prospects for the labour market and the economy in general.
He pointed out that the incoming economic data are encouraging and indicate that a moment has come when it is justified to limit the rate hikes, which may already take place from December.
These comments made up 79.4 % of the probability that after four increases in a row by 75 bps, the Fed will decide during its December meeting to raise the federal funds rate by only 50 bps has increased.
Just a week ago, the probability of such a move was estimated at 67.5%, and on 10 November, only 52 per cent and 32.5 per cent chances were given to the fifth rate hike in a row by 75 bps. Currently, such a scenario is valued at only 20.6 per cent.
Thus, it can be seen that last week's comments by Jerome Powell increased expectations regarding the Fed's pivot, i.e. a change in the attitude of the US central bank to further moves in interest rates.
These expectations have remained the same even after BLS publicized the phenomenal report on the American labour market. According to data from the US Labour Office, the local economy created as many as 263,000 new jobs in November.
The optimistic tone of this publication was also supported by a positive revision of last month's reading and data on wage inflation and positive revisions of their October readings.
• US Nonfarm Employment Change (NFP): 263,000, forecast 200,000, previously 284,000 (revised positive from 261,000)
• Average hourly earnings m/m: 0.6%, forecast 0.3%, previously 0.5% (positive revised from 0.4%)
• Average hourly earnings y/y: 5.1%, forecast 4.6%, previously 4.9% (positive revised from 4.7%)
This is a solid report indicating that the labour market is not weakening. However, it seems unlikely that this publication will be able to persuade members of the Federal Open Market Operations Committee (FOMC) to change their stance and raise interest rates for the fifth time in a row by 75 bps.
It may be evidenced by no change in the valuation of the Fed's future monetary policy tightening path and market reaction to Friday's NFP report. While just after its publication, the dollar experienced a growth increase, before the end of Friday's session, the US currency more than gave back the earned profits.
It seems, therefore, that the publication of the report on consumer inflation in the US, scheduled for 13 December this year, i.e. the day before the next meeting of the Federal Open Market Operations Committee (FOMC), will be of significant importance for the cryptocurrency market, the fall of which could contribute to the next uptrend. The last publication of this report contributed to the increase in BTC quotations by over 10%.
While the Fed's monetary decisions were one of the main catalysts driving the cryptocurrency winter observed for over a year, future meetings could already contribute to a certain upward rebound and the beginning of a new bull market.
It is worth noting that although due to strong ties with FTX, the cryptocurrency lender BlockFi has also recently been forced to file for bankruptcy, Bitcoin's quotations have increased by almost $2,000 over the past few days, returning above $17,000, which may signal that the cryptocurrency market has probably already priced in all the negative information about the collapse of the third largest cryptocurrency exchange and its related entities, and macroeconomic events that affect the dollar will also affect cryptocurrency prices again.
The return of the negative correlation between BTC and USD may confirm this. Just after the collapse of the FTX exchange, the correlation between these assets changed from strongly negative (-0.94) to highly positive, reaching a 19 November level of 0.84. Now, in turn, we are seeing a return to negative values, resulting in the fall of the dollar driving the rise of Bitcoin.
Ethereum's quotations fell between November 4 and 9 by over 36%, and then, driven by a highly optimistic report on CPI inflation in the US, they rebounded by almost 26%, thus leading to a re-test of previously defeated support (now resistance).
However, this increase lasted only one day; from 11 November this year, the ETH rate fell again, returning to the USD 1100 region, where on 22 November, there was a demand reaction again.
The increases observed since then have caused the exchange rate of this cryptocurrency to return to the technical resistance of USD 1,300. If only this barrier is broken, we could expect a further rally north towards the zone between USD 1380-1425 or even USD 1650.
Bitcoin Cash (BCH)
Bitcoin Cash fell by nearly 31% between 5 November and 9 November, falling to the lowest since December 2018. Similarly to BTC and ETH, in reaction to the US CPI inflation report published on 10 November, it went up by over 22%.
It is worth noting that although the increase stopped for several days in the area of ââthe previously defeated support of 106 USD, this resistance was finally overcome. Over the last few days, we have observed its re-test.
The demand reaction that appeared around this level initiated the current upward rebound. If this trend continues, the BCH rate could return to USD 125 in the near future or even increase to USD 133.50.
Litecoin's quotations collapsed between November 7 and 9 this year by more than 35 %. This sell-off stopped only in ââtechnical support, around USD 50, where evident demand pressure appeared on 10 November.
However, the LTC exchange rate increased by over 78 % due to the subsequent appreciation, more than making up for earlier losses. It is worth noting that this increase led to the overcoming of technical resistance levels of USD 64.50 and USD 73. For several days it stopped only in the consolidation between USD 73 and USD 80, from which the LTC rate is currently breaking out. Unless there is a strong supply reaction in the near future that could negate the current increases, the quotations of this cryptocurrency could move further north towards USD 96.