Bitcoin (BTC) slumped 5% within the final 24 hours, reaching the sub-$57,000 price stage for a short interval. This may very well be associated to the cautious optimism that the FOMC minutes launched this week confirmed to the market, signaling a wait-and-see method from the Fed. Jag Kooner, Head of Derivatives at Bitfinex, added that the NFP numbers popping out tomorrow could lead on BTC to stabilize or go for a deeper correction within the worst-case state of affairs.

“The cautious tone of the Fed minutes, indicating a wait for more definitive economic data before rate cuts, could help to bring stability to Bitcoin prices or at worst result in a slight decline,” shared Kooner with Crypto Briefing. “Investors may also perceive the lack of immediate rate cuts as a sign of sustained economic uncertainty, potentially dampening risk appetite for volatile assets like bitcoin.”

Notably, the minutes acknowledged that the US financial system is slowing and that “price pressures were diminishing,” which helps a story of moderating inflation. This maintains the Fed’s method of optimism in direction of a downward trajectory in inflation however with out recognizing this as adequate to justify speedy fee reductions, highlighted Kooner.

Moreover, the Non-Farm Payrolls (NFP) numbers are popping out tomorrow, and the market expects a decline in job development from 272,000 in Might to 200,000 in June. The unemployment fee will keep at 4% if these numbers come true.

“In terms of labor market health, a reduction in job growth suggests a cooling labor market, aligning with the Fed’s observations of slowing economic activity. However, a steady unemployment rate indicates that while job creation is slowing, the overall employment situation remains stable.” 

Subsequently, the NFP report leaves the door open for 2 eventualities. The primary is the one the place job development comes weaker than anticipated, it might enhance expectations for future fee cuts, which could bolster Bitcoin costs as buyers search different property in anticipation of a looser financial coverage. Conversely, the second state of affairs consists of Bitcoin struggling downward stress if the job market seems extra resilient, defined Kooner.

“In terms of wage growth, with the Fed noting slowing wage growth in the minutes, the NFP report’s wage data will be scrutinized. The consensus forecast is for hourly wages to slow down to 0.3 percent in June from 0.4 percent in May. Any significant uptick could put upward pressure on inflation and negatively influence the market’s inflation outlook and the Fed’s future policy decisions,” he added.

Consequently, this impacts the web flows of spot Bitcoin exchange-traded funds (ETFs). These crypto merchandise would possibly see an uptick if market members imagine that financial uncertainty will drive the Fed in direction of eventual fee cuts, enhancing the enchantment of Bitcoin as an inflation hedge. 

“However, significant inflows would depend on broader market sentiment and risk appetite. Currently however, we’ve recently seen quite underwhelming flows and a lack of dip-buying,” concluded Kooner.