Bitcoin: Increased Volatility Expected After Release of Payroll Data
Today, the updated data on the US non-farm payroll will be released, potentially causing an increase in volatility for Bitcoin. In recent days, Bitcoin’s volatility has decreased following Monday and Tuesday’s price declines which brought it below $62,000.
The data on nonfarm payroll and the unemployment rate in the USA is expected today at 14:30 CET. This data point is crucial for assessing the labor market and indirectly the Federal Reserve’s monetary policy. The central bank aims not only to maintain consumer goods price inflation around 2% but also to promote full employment. If the unemployment rate is high or the labor market is stagnant, the Fed intervenes to encourage recovery.
Currently, the US unemployment rate is 4.2%, slightly higher than a year ago. If September’s unemployment rate turns out to be higher than the previous month’s 4.2%, it could motivate the Fed to intervene further. Such disparities in the released data could result in increased market volatility.
The Federal Reserve’s monetary policy is also a factor influencing Bitcoin’s volatility. The lack of scheduled FOMC meetings in October for further interest rate cuts indicates that the next cut will occur on November 7. Markets speculate on a possible 25 basis points cut this time. More interest rate cuts lead to increased liquidity in circulation, which significantly impacts financial markets. If today’s data suggests increased interventionism by the Fed, markets may start pricing in another 50-point cut in November, potentially spreading optimism despite an increase in unemployment.
As for Bitcoin, options with expiring trades currently have a higher implied volatility compared to those expiring at the end of the month. This indicates that there could be an increase in short-term volatility. However, if today’s data aligns with previous forecasts, the market reaction may be minimal. Additionally, an increase in volatility is expected next week, even if not immediately after today’s release.
The search for an excuse to increase volatility may be driving market behavior. This excuse could come from today’s non-farm payroll data or other factors, such as the international geopolitical situation. Recent events, like the missile attack by Iran against Israel, have caused fluctuations in crude oil prices, indicating market concerns. Any major geopolitical development, especially in the Middle East, is likely to result in increased volatility sooner or later.