Bitcoin and other major cryptocurrencies are closely watching how the stock market reacts to the upcoming US jobs report. Data shows a 30-day correlation coefficient for Bitcoin and the MSCI World Index reaching 0.60, which is one of the highest levels ever recorded.
A coefficient reading of 1 would mean Bitcoin and the stock market are moving in perfect unison, while -1 would suggest an opposite relationship.
Weak sentiment in crypto markets
Right now, there’s uncertainty over how the jobs report will influence both the stock market and Bitcoin. The crypto queen has increased by 1% to $56,653. It’s now about $17,000 short of its all-time high from March.
That rally was driven by heavy inflows into US spot-Bitcoin ETFs, but this upward momentum has cooled off. BTC has been struggling to stay above key support levels.
Over the past week, price has dropped by more than 5%, and the dip below the $58k support level has increased selling pressure, with analysts from Bitfinex predicting that Bitcoin could fall even further, possibly to $40,000.
Another sign of bearish sentiment is the large number of liquidations in the market. On a single day, over 32,000 traders were liquidated, totaling about $84 million in losses.
One of the popular people taking a short position is Arthur Hayes, the founder of BitMEX, who believes the price of Bitcoin will face more declines.
Analysts are anticipating that the US jobs report will reveal a slight increase in hiring and a decrease in unemployment. This would show stabilization following the concerns sparked by the weaker July data.
Speculative assets like cryptocurrencies tend to perform better in a low-interest-rate environment. So far, the Federal Reserve is expected to introduce multiple rate cuts before the year ends, totaling up to 150 basis points.
These cuts could start as early as this month, with a 25 basis point reduction expected.
If the Fed’s rate cuts come sooner rather than later, and if they are seen as a response to a weakening economy, Bitcoin’s price could drop by 15% to 20%.
