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Bitcoin price is finding buyers at $42,670 on the first day of the new year, and there are no significant losses in altcoins in general. Increased volatility is almost certain in the coming days as the agenda is quite busy. We are entering a week that will host important developments on the macro front after a long holiday.
This Week in Cryptocurrencies
Yesterday, we touched on the important developments of this week and shared expectations. However, we need to dedicate a separate section to Friday because after this break, it could bring the first sleepless night with increased volatility.
The U.S. Bureau of Labor Statistics will announce the non-farm employment report for December on January 5, 2024. The Federal Reserve made optimistic statements about the economic outlook at its last meeting in 2024. In fact, the markets have even entered into greater expectations for an interest rate cut target for the year 2024, the statements were that positive.
But if the employment data coming on Friday is not as expected, the markets could enter a new period of uncertainty, at least on the macro front.
Non-Farm Employment Data
Inflation is approaching 2% again while wage increases are moderate. The calmness in oil prices is promising. However, the Fed wants to see more unemployment and weakening employment. This is an important supporter in their fight against inflation.
However, it could be beneficial to stay away from excessive optimism because New York Fed President Bill Dudley says;
“One thing that could go wrong is the Fed easing policy prematurely or the market itself easing financial conditions prematurely, which would stimulate the economy and prevent the Fed from lowering interest rates as quickly as the market expects.”
According to him, the markets took the Fed’s optimism and turned it into very large cuts in short-term interest rates for the year 2024, acting hastily. Christopher Ailman, Chief Investment Officer of the California State Teachers’ Retirement System, said he expects at best single-digit returns in risk markets during an election year.
For all these reasons, the upcoming wage increase and especially the employment data on Friday will be closely watched by cryptocurrency investors. A negative development on this front could create a multiplier effect for the “sell the news” case feared to occur after the approval of a spot Bitcoin ETF.
