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FOMC versus BTC price ‘local bottom’ — 5 things to know in Bitcoin this week

Bitcoin network fundamentals have never looked better, as optimism trickles back when it comes to BTC price strength in a key Fed rate decision week.
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Bitcoin network fundamentals have never looked better, as optimism trickles back when it comes to BTC price strength in a key Fed rate decision week.

Bitcoin (BTC) starts the new week with optimism as traders greet the first green weekly candle in over a month.

BTC price strength appears to be gradually improving after a weak August and start of September, with BTC/USD climbing toward $27,000.

A solid weekly close provides the backdrop to what promises to be an interesting few days, which will include a key United States macroeconomic event as a potential volatility driver.

The Federal Reserve will meet to decide on interest rate policy — and any surprises could have significant repercussions for risk assets, including crypto.

Elsewhere, things are looking promising for Bitcoin, with network fundamentals set to surge higher to new records.

Strength “under the hood” is similarly being reflected in hodler behavior, with wallet numbers continuing to shoot higher regardless of BTC price action.

Cointelegraph takes a look at these topics and more as Bitcoin begins what is likely its most eagerly-awaited week of September.

Trader eyes BTC price "local bottom"

Bitcoin offered little volatility over the weekend, but calmer trading conditions are already being challenged into the new week, data from Cointelegraph Markets Pro and TradingView shows.

The Sep. 17 weekly close soon gave way to upside volatility, and at the time of writing, bulls are attempting to build on that foundation to crack new month-to-date highs.

BTC/USD 1-hour chart. Source: TradingView

Popular trader Credible Crypto thus suggested that the weekend zone could well form a “local bottom.”

“This region continues to be defended, with buyers stepping in here once again. Has the makings of a local bottom/base being formed imo,” he told X subscribers overnight, alongside a chart of order book liquidity on largest global exchange Binance.

“I think we probs push back up to 27k+ soon.”
BTC/USD order book data for Binance annotated chart. Source: Credible Crypto/X

A prior post noted the lack of promise in shorting at weekend levels, with bid liquidity improving.

The weekly close meanwhile excited Michaël van de Poppe, founder and CEO of trading firm Eight, who saw key support holding at the 200-week exponential moving average (EMA).

“Bitcoin is closing above the 200-Week EMA, which is vital for bullish continuation,” he explained.

“Next week we should continue to do so and price starts to look similar to the 2015/2016 cycle.”

Van de Poppe uploaded a chart showing the interplay between spot price and the 200-week EMA, currently at $25,700, since 2020.

“Markets are consolidating with a weekly close strongly above the 200-Week EMA for Bitcoin. The chances of the correction to be finished are increasing day by day,” he added in a separate post.

BTC/USD annotated chart. Source: Michaël van de Poppe/X

Some are staying sober on the outlook for Bitcoin into 2024. Among them is popular trader and analyst Rekt Capital, who continues to eye the potential for a bearish double top pattern to play out on weekly timeframes.

“Make no mistake - Bitcoin is in an early stage Bull Market,” he wrote in part of weekend X analysis.

“Long-term the outlook is bullish. Mid-term? Over the next 7 months, we may or may not get 1 last major correction. Will it happen? It would be wise to at least be ready for it if it does.”
BTC/USD annotated chart. Source: Rekt Capital/X

FOMC volatility due with rate pause odds at 99%

The word on everyone’s lips this week is FOMC — the Federal Open Market Committee — which will meet to decide on interest rates going forward.

If history is a guide, the Sep. 20 decision will induce at least some form of volatility across risk assets, with Bitcoin and crypto no exception.

The landscape surrounding the latest FOMC meeting is mixed — last week’s macro data shows inflation beating expectations, yet markets overwhelmingly believe that the Fed will not raise rates further to combat it.

According to CME Group’s FedWatch Tool, the odds of rates remaining the same are almost unanimous.

Fed target rate probabilities chart. Source: CME Group

This could reduce the impact of the FOMC event — but conversely, a curveball decision which goes against market appraisals would be felt all the more keenly.

“This week sets up the rest of 2023,” financial commentary resource The Kobeissi Letter summarized while highlighting upcoming macro data releases and more.

“Fed guidance on Wednesday sets the tone for the next few meetings. Expect to see lots of volatility this week.”

Explaining the likely outcome of FOMC, crypto and macro insight resource Ecoinometrics suggested that the market odds were no surprise based on Fed signals.

“There will be no rate hike at the FOMC meeting on September 20. That’s what the Fed Funds futures are pricing,” it wrote at the weekend.

“And actually they have been very consistent about that for a long time now. The fact that the latest inflation numbers aren’t exactly going in the right direction didn’t change anything to that.”
Fed funds futures annotated chart. Source: Ecoinometrics/X

An accompanying chart added that the market “never had doubts” about what would happen in September.

Difficulty, hash rate return to new records

Back to Bitcoin and a return to the “up only” style of fundamental growth is set to characterize the coming week.

Mining difficulty, which dipped 2.65% at its last automated readjustment two weeks ago, will cancel out its losses on Sep. 19.

The latest estimates from BTC.com suggest that difficulty will increase by a solid 4.6% — taking it to new all-time highs in the process.

Bitcoin network fundamentals overview (screenshot). Source: BTC.com

2023 has seen a broad uptrend in difficulty challenged only briefly, even as spot price action delivered more challenging conditions.

The story is the same for hash rate — the estimated processing power deployed by miners — which continues to set new records of its own.

A conspicuous spike into the new week has become a talking point in its own right, with optimism increasing among commentators as a result.

“The bitcoin network hashrate is at an all time high,” Nicholas Cary, co-founder of Bitcoin data resource Blockchain.com, noted earlier this month.

“What does this mean? The difficulty is a measure of how difficult it is to mine a Bitcoin block, or in more technical terms, to find a hash below a given target. A high difficulty means that it will take more computing power to mine the same number of blocks, making the network more secure against attacks.”
Bitcoin estimated hash rate chart. Source: Blockchain

Blockchain estimated hash rate at 422 exahashes per second (EH/s) as of Sep. 17, while BTC.com currently puts the figure at 430 EH/s.

Bitcoin address numbers reach multi-year highs

Just as there is no stopping Bitcoin miners, the user base likewise appears to be relentlessly expanding.

The number of new BTC wallets being created is now at its highest since late 2017, the time of Bitcoin’s old all-time high of $20,000, data from on-chain analytics firm Glassnode shows.

Bitcoin new addresses chart. Source: Andre Dragosch/X

According to the firm’s address tracking metric, even the later trip to $69,000 failed to spark as big a reaction in new address creation.

Active addresses, however, do mimic mid-2021, returning to those levels for the first time this month.

The data was uploaded to X by Andre Dragosch, head of research at crypto investment firm Deutsche Digital Assets. Dragosch quizzed whether BTC price performance would copy the return to form across the Glassnode metrics.

“All-time high in addresses with 0.01 Bitcoin or less,” James Straten, research and data analyst at crypto insights firm CryptoSlate, added about further Glassnode data.

“Fifth or so strongest accumulation from this cohort in the past five years. This asset continues to be cornered by a small cohort.”
Bitcoin wallets with a balance of 0.01 BTC or less chart. Source: James Straten/X

Crypto fear is never far away

While things may be looking up across the Bitcoin ecosystem, the average crypto investor is yet to regain their confidence.

Related: Bitcoin price all-time high will precede 2024 halving — New prediction

According to the latest data from the Crypto Fear & Greed Index, the mood characterizing crypto continues to be one of “fear.”

The extent of the cold feet is modest — the Index, which normalizes sentiment on a 0-100 scale, is now just below its “neutral” 50 mark.

Fear has nonetheless dominated since mid-August, with price triggers a key influencer.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Analzying net unrealized profit and loss data among the BTC supply, meanwhile, popular trader and analyst Titan of Crypto revealed what he called a “striking correlation” between this year’s environment and that seen in the run-up to previous Bitcoin bull runs.

“I think we might witness a similar price action as Bitcoin had in the first 2 cycles,” part of his commentary forecast.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

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February Employment Situation

By Paul Gomme and Peter Rupert The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000…

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13 hours ago

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March 9, 2024

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By Paul Gomme and Peter Rupert

The establishment data from the BLS showed a 275,000 increase in payroll employment for February, outpacing the 230,000 average over the previous 12 months. The payroll data for January and December were revised down by a total of 167,000. The private sector added 223,000 new jobs, the largest gain since May of last year.

Temporary help services employment continues a steep decline after a sharp post-pandemic rise.

Average hours of work increased from 34.2 to 34.3. The increase, along with the 223,000 private employment increase led to a hefty increase in total hours of 5.6% at an annualized rate, also the largest increase since May of last year.

The establishment report, once again, beat “expectations;” the WSJ survey of economists was 198,000. Other than the downward revisions, mentioned above, another bit of negative news was a smallish increase in wage growth, from $34.52 to $34.57.

The household survey shows that the labor force increased 150,000, a drop in employment of 184,000 and an increase in the number of unemployed persons of 334,000. The labor force participation rate held steady at 62.5, the employment to population ratio decreased from 60.2 to 60.1 and the unemployment rate increased from 3.66 to 3.86. Remember that the unemployment rate is the number of unemployed relative to the labor force (the number employed plus the number unemployed). Consequently, the unemployment rate can go up if the number of unemployed rises holding fixed the labor force, or if the labor force shrinks holding the number unemployed unchanged. An increase in the unemployment rate is not necessarily a bad thing: it may reflect a strong labor market drawing “marginally attached” individuals from outside the labor force. Indeed, there was a 96,000 decline in those workers.

Earlier in the week, the BLS announced JOLTS (Job Openings and Labor Turnover Survey) data for January. There isn’t much to report here as the job openings changed little at 8.9 million, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively.

As has been the case for the last couple of years, the number of job openings remains higher than the number of unemployed persons.

Also earlier in the week the BLS announced that productivity increased 3.2% in the 4th quarter with output rising 3.5% and hours of work rising 0.3%.

The bottom line is that the labor market continues its surprisingly (to some) strong performance, once again proving stronger than many had expected. This strength makes it difficult to justify any interest rate cuts soon, particularly given the recent inflation spike.

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Mortgage rates fall as labor market normalizes

Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

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1 day ago

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March 8, 2024

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Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.

The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.

From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250


Below is an explanation of how we got here with the labor market, which all started during COVID-19.

1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.

2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.

Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.  

2-US_Job_Quits_Rate-1-2

3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too

Total employment data

4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels. 




From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.

Here are the jobs that were created and lost in the previous month:

IMG_5092

In this jobs report, the unemployment rate for education levels looks like this:

  • Less than a high school diploma: 6.1%
  • High school graduate and no college: 4.2%
  • Some college or associate degree: 3.1%
  • Bachelor’s degree or higher: 2.2%
IMG_5093_320f22

Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.

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Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January…

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March 8, 2024

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Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush. 

What happened? Let's take a closer look.

On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.

Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.

Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K,  a 124K revision, which was the biggest one-month negative revision in two years!

Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.

To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).

And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...

... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...

... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.

While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.

But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).

This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.

There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).

Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!

But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!

The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!

Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...

Source: St Louis Fed FRED Native Born and Foreign Born

... but there has been zero job-creation for native born workers since June 2018!

This is a huge issue - especially at a time of an illegal alien flood at the southwest border...

... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.

Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.

Tyler Durden Fri, 03/08/2024 - 13:30

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