Bitcoin hit a new five-month high early Monday, extending a two-week price gain despite a dismal U.S. jobs report on Friday failing to dampen hopes for Federal Reserve (Fed) tapering in November. The market also ignored data indicating allegedly bearish posture by leveraged funds in the futures market.
According to CoinDesk 20 data, the cryptocurrency climbed above $57,000 during the early European hours, the most since mid-May. Prices jumped 13% in the week ending October 10, marking the second consecutive double-digit weekly gain. Bitcoin’s persistent resistance to typically unfavorable macroeconomic factors could be linked to increased chances of the United States approving a futures-based bitcoin exchange-traded fund (ETF) this month.
The intense mood in BTC has been fueled in part by prospects of a futures-based Bitcoin ETF being approved soon. Other reasons contributing to the rise include sustained institutional investor inflows and SEC chairman Gary Gensler informing Congress that the agency has no plans to regulate cryptocurrency,” Coinbase Institutional said in its weekly email.
Nonfarm payrolls climbed by 194,000 in September, compared to the Dow Jones projection of 500,000. This, according to U.S. jobs statistics released on Friday. On the other hand, the unemployment rate fell to an 18-month low of 4.9 percent. Leaving the Fed on track to begin unwinding the crisis-era stimulus in November and raise interest rates by mid-2022.
Crypto Market analysis
The headline NFP jobs report on Friday did little to undermine Fed tapering/tightening predictions. For example, December 2023 Euro-dollar futures continue to break lower, keeping with the market’s recent tendency of re-pricing the U.S. interest rate curve in September Dot Plots towards Fed predictions. It is bullish for the dollar, according to ING analysts in their daily market analysis.
Recent reports of the Soros Foundation increasing exposure to bitcoin and U.S. Senator Cynthia Lummis disclosing bitcoin purchases may have contributed to the positive sentiment.
The Commitments of Traders (COT) report released Friday by the United States Commodity hedge funds and other types of money managers that effectively borrow money to trade boosted their short holdings from 18,000 to 22,000 in the week ended March. The increase is not necessarily due to blatant short posture but rather to increasing cash interest and carrying arbitrage strategy. The approach entails purchasing the asset on the spot market and selling it in the futures market when the latter is trading at a considerable premium to the spot price. Futures prices converge with spot prices on the expiry day, providing a risk-free return to a carry trader.
According to Skew statistics, the premium on CME-based front-month futures increased from an annualized 1.5 percent to over 12 percent in the seven days ending October 5. While bitcoin appears to be on solid grownd, some speculators foresee a brief price drop. The one-week put-call skew has shifted to the positive side, indicating a desire for short-term downside protection or put options.
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