Bitcoin’s price (BTC) fell to $ 11,219 on Bitstamp on Aug. 7 after the US stock market fell. BTC quickly recovered from the brief crash and stabilized above $ 11,600.
The price of Bitcoin is falling sharply at Bitstamp. Source: TradingView.com
The release of new job data caused the US stock market to collapse around noon. The non-farm workforce rose 1.763 million in July, beating Wall Street expectations by 10.6%.
Despite the bullish job data, analysts seem concerned that the job market is not growing fast enough. Since the pandemic started in March, the US still has 13 million unemployed.
A variety of factors influenced Bitcoin
In the past few months, Bitcoin price has seen relatively volatile moves ahead of new job data. The volatility is likely due to the recent correlation between BTC and stocks.
The correlation between Bitcoin and the S&P 500. Source: Skew
Data from Skew shows that Bitcoin has had some correlation with stocks since April. Because the stock market is very responsive to unemployment data, BTC has typically followed the trend of stocks during the first week of the month.
The strategists were skeptical of the new job data and took into account the sudden increase in part-time employees. Washington Center for Equitable Growth economist Kate Bahn said many of the jobs being added are likely to pay less. She said:
“We have created more jobs than most people expected, but the increases were really disproportionately high in part-time workers. For me, that means that even if workers return, these are jobs that pay less and families are worse off. “
The job data, which seemed positive on paper, eventually caused the US stock market to tumble. The Dow Jones Industrial Average was down 0.28% after falling slightly by 0.6% the previous day.
When the US stock market slumped, major cryptocurrencies like Bitcoin and Ethereum’s Ether (ETH) plummeted. While BTC fell to $ 11,219 on Bitstamp, Ether fell to around $ 371 on major exchanges.
Macro Factors That Could Affect BTC in the Coming Week
In the short term, there are several macro factors and geopolitical risks that could affect Bitcoin. First, US-China relations are deteriorating due to the WeChat and TikTok bans. Second, talks about a stimulus agreement have slowed down.
Tension between the two superpowers seems to be mounting after US President Donald Trump issued an order banning Tencent’s WeChat and ByteDance’s TikTok. The chances for countermeasures by China could increase, which could possibly affect stocks and thus Bitcoin.
Reportedly, after the clash between Republican and Democratic officials, the chances of a business cycle deal are slim. US Treasury Secretary Steve Mnuchin said:
“I think there are a lot of issues where we are close to a compromise position, but I think there are a handful of very big issues where we are still very far apart. We will see. I think we have always said our goal is to have a common understanding tomorrow. If the Democrats are willing to compromise and do something, we will likely do something. “
The coincidence of a delayed economic deal and mounting tensions between the US and China could put pressure on stocks and Bitcoin in the short term.
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