April 2024 Non-Farm Payrolls: Inflation Expectations Rise Slightly, and the Labor Market Remains Tight

Central Bank

Economic

Summary:

Non-farm payrolls came in sharply lower than expected, boosting expectations of interest rate cuts. The market regained its expectations of two rate cuts this year, bringing forward the Fed's first rate cut from November to September. If the subsequent inflation data also declines, it will completely fuel the expectation of rate cuts.

On May 3, local time, the April non - farm payrolls report released by the US Bureau of Labor Statistics showed that the number of new jobs was 175,000, which was lower than the market expectation of 243,000 significantly and was also the smallest increase in six months. In addition, the number of employed persons in February and March this year has been revised. In February, the non-farm payrolls were revised down to 236,000 from 270,000. In March, the non-farm payrolls were revised upward from 303,000 to 315,000. The total number of employed persons in January and February was revised down by 22,000. Historically, the average number of new jobs per month in 2023 was 251,000, and the average number of new jobs per month in the first quarter of 2024 was 276,000. Therefore, judging from the results alone, these non-farm payrolls did help boost market expectations for rate cuts.

The US unemployment rate in April was 3.9%, higher than the previous value and the expected 3.8%. So far, the unemployment rate has remained below 4% for 27 consecutive months, which was the longest period since the late 60s of the 20th century. Meanwhile, the unemployment rate has been in a narrow range of 3.7% to 3.9% since August 2023. The average hourly earnings of the US nonfarm private sector rose 0.2% MoM to $34.75.

In terms of specific breakdowns, the number of new jobs in the private sector was 167,000, lower than the previous value of 232,000. Among them, the growth of employment in the private sector was mainly from health care, transportation, and retail trade. The number of new jobs in health care was 56,200, down from 72,300 in the previous month. The number of new jobs in the transportation and warehousing industry was 21,800, higher than the previous value of 1,200. Besides, the number of new jobs in the retail industry was 20,100, higher than the previous value of 17,600.

Leisure and Hospitality

The Leisure and Hospitality industry added 5,000 new jobs in April, which has slowed down sharply from the previous value of 49,000 and far lower than the average employment of 37,000 in the past 12 months. The Leisure and Hospitality sector was the main sector that supported US job growth in March. The main reason for the weaker US non-farm payrolls data in April was the sharp slowdown in job growth in this sector.

April 2024 Non-Farm Payrolls: Inflation Expectations Rise Slightly, and the Labor Market Remains Tight_1

The labor market cooled unexpectedly this month, mainly due to easing on the demand side. Correspondingly, wage growth also cooled in April, with average hourly earnings rising by 0.2% MoM lower than the previous value of 0.3%, and the YoY increase also falling further to 3.9% (previous value of 4.1%). The demand reduction will first affect the Leisure and Hospitality industry of labor-intensive service industries.

In addition, the high turnover of people has always been a problem in the Leisure and Hospitality industry, and there is a considerable number of part-time workers. According to the household survey in April, the cumulative number of part - time workers in March rose to an average YoY growth rate of 4.8%, totaling 27.72 million in the month, with a decrease of 914,000 from the previous value (MoM). The decrease in part-time staff may also be one of the main reasons for the decline in this industry.

If we look at the detailed non - farm payrolls data released by the US Bureau of Labor Statistics, we will find that the data is divided into two parts. One is the private non-farm payrolls surveyed by the agency, and the other is the private non-farm payrolls (excluding private domestic workers) from the household survey. The non-farm payrolls data we usually look at belong to the former.

These two are mainly different in terms of survey subjects, statistical caliber, and itemized treatment. We will not try to explain this in detail. In simple terms, there are no duplicate individuals in the household survey. That is, even though a person may be working multiple part - time jobs at the same time, the person is only counted once. However, the principle of agency surveys is that as long as a person works in multiple positions and appears on multiple payslips as an employee, the number of appearances will be counted several times. This is one of the reasons why the NFP data can sometimes be exaggerated. In other words, the results of the household survey are more conservative. Therefore, when the non-farm payroll data of the agency survey is exaggerated, we should refer to the non-farm payroll data of the household survey.

The occasional unexpected drop in employment can not tell anything. However, the employed population of the industry has been declining, combined with the employment data for some time. Although the number of subsequent jobs may still be repeated, the overall trend of declining employment in the industry has already formed.

Construction

The construction sector, which added 39,000 jobs in March, grew by only 9,000 jobs in April, supported by bullish US construction of buildings.

April 2024 Non-Farm Payrolls: Inflation Expectations Rise Slightly, and the Labor Market Remains Tight_2

According to the National Association of Realtors (NAR), existing home sales in the United States fell in March from a nearly one-year high set in February, highlighting the impact of high mortgage rates and high home prices on the US housing market.

The total number of US annualized existing home sales in March was 4.19 million, which was lower than the expected 4.2 million and the previous value of 4.38 million. Existing home sales fell 4.3% MoM in March, higher than expectations of 4.1% and sharply lower than the previous reading of 9.5%. Besides, it was also the biggest monthly decline since November 2022.

However, there were 1.11 million homes for sale as of the end of March, up 14.4% YoY. At the current rate of sales, it will take about 3.2 months to consume the supply in the market, which is still less than the 5-month inventory-to-sales ratio. This indicates that while inventories are rising, the market remains tight overall. As a result, the median existing home price rose 5.7% YoY to US$384,500 in March. In addition, the NAR's report also showed that properties stayed on the market for an average of 33 days in March, which was significantly lower than the previous value of 38 days. This indicates that the demand for homes remains strong.

Against the backdrop of strong housing demand and insufficient supply, the number of employed people in the construction industry should continue to grow. The only explainable reason for this is that the previous Fed's hawkish speech weighed on rate cut expectations severely, which affected the confidence of real estate developers to expand production. In other words, the key to the continued growth of construction employment is still the Fed's management of interest rate cut expectations. However, the released non-farm payroll data has reignited rate - cut expectations. It is believed that the employment - population in the construction industry will continue to rise in the subsequent evolution, thanks to the strong demand side of real estate.

The Labor Market and Inflation

After the shock of the pandemic a few years ago, US domestic consumption and real estate demand are now stronger than the pre-pandemic level, which indicates that the demand gap is greater than the supply gap.

The labor force participation rate, which reflects the supply of the labor market, remained unchanged at 62.7% in April, still close to the post-pandemic recovery high of 62.8% in August - November 2023, indicating that the labor supply was relatively stable in April. The labor force participation rate failed to return to pre-pandemic levels, which indicates that the labor supply has suffered a permanent contractionary effect, leaving the labor market in a tight trend in the long term.

Against this backdrop, the labor gap fell by 387,000 to 1.997 million, falling below 2 million for the first time since August 2021. As a result, job vacancies have decreased. In other words, the main reason for the ease of the labor tension is the cooled demand rather than the increased supply.

Given that the US fiscal policy maintains an expansionary stance, the demand for services consumption is still relatively strong. In terms of the industry structure, the weakness in April employment may be temporary, which is likely to improve again in May.

It should be noted that if the unemployment rate continues to rise sharply, the demand gap may widen rapidly in the short term, leading to "undersupply secondary inflation", which is driven by core commodity prices. The continuous decline in the unemployment rate may lead to a "cost-push secondary inflation", which is driven by high wages due to the further difficulty of enterprises in hiring workers. Both kinds of inflation could cause the Fed to delay rate cuts this year. In the medium to long term, the former scenario could quickly shift to deflationary, while the latter could lead to prolonged "stubbornness" in inflation.

Market Reaction

Non-farm payrolls were lower than expected, boosting expectations of rate cuts. After the release of the report, according to the Fed's CME FedWatch data, the market regained its expectations of two rate cuts this year. The Fed's first rate cut is expected to be brought forward from November to September, and the probability of a September rate cut is close to 50%, while the second rate cut is expected to occur by the end of the year.

April 2024 Non-Farm Payrolls: Inflation Expectations Rise Slightly, and the Labor Market Remains Tight_3

US Treasury yields declined. The two - year Treasury yield fell 5.4bp to 4.829%. The yield on the 10-year Treasury fell 6.6bp to 4.518%. The three major US stock indexes rose collectively, with the Nasdaq rising nearly 2%. The dollar index declined to 105.0851. Gold prices in London edged lower to $2301.93 an ounce.

For now, the Fed remains slightly dovish. Although the first rate cut was delayed across the board with strong data in Q1, weaker inflation expected in Q2 and Q3 and a slowdown in the labor market left room for a rate cut. Therefore, there is no need to be overly pessimistic about rate cut expectations.

Several Fed officials, such as Fed Chairman Jerome Powell, Atlanta Fed President Bostic, and Chicago Fed President Goolsbee, have all said in public: "An unexpected weakness in the labor market could support the prospect of interest rate cuts and policy adjustments in advance."

However, looking around the NFP, the labor market has indeed eased due to the cooling of the demand side, but it is still far from the level of unexpected weakness. Goolsbee also said after the release of the report: "The increase in employment of 175,000 is a very solid non - farm payrolls report. I believe the Fed's monetary policy is restrictive. If such restrictive policies persist for a long time, attention needs to be paid to the job market. "

The NFP report is notoriously volatile, and what we see this month may not be the same as next month. While this NFP gave the Fed some hope, it did not establish a trend for them. In other words, it is not enough to fully restore the confidence that the Fed needs to "inflation will continue to move towards 2%". Therefore, although the non - farm payrolls have boosted the expectation of rate cuts, the Fed may not have any "action".

More Fed officials will deliver speeches this week. Judging by the ununified speeches of Bowman and Goolsbee, there may still be no consensus within the Fed. The speeches of other officials need to be further observed.

At present, there are still 2 inflation reports and 1 non - farm payroll data to be released before the June interest rate meeting. If the subsequent inflation data also declines, it will completely fuel the expectation of a rate cut.

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Glendon

Economic

Icahn Enterprises (IEP), the brainchild of legendary investor Carl Icahn, has captured the attention of both income-seeking and value-oriented investors. However, the company's recent performance and future prospects raise a critical question: Is IEP a stock primed for a rebound, or a potential value trap to be avoided?

A Legacy Built on Activism

Icahn Enterprises has a long history of success in activist investing. Carl Icahn, known for his aggressive tactics and keen eye for undervalued companies, has used IEP as a platform to acquire stakes in other businesses and push for changes that unlock shareholder value. This strategy has yielded significant returns for IEP in the past.

Recent Struggles and Shifting Focus

However, Icahn Enterprises has faced challenges in recent years. The significant decline in the stock price, down over 66% since May 2023, reflects investor concerns about the company's investment performance and its heavy reliance on a single holding – Icahn Automotive (IAL).

In response, Icahn has announced a renewed focus on activist investing, aiming to replicate the past success that built his reputation. This shift in strategy could reignite growth and unlock value for IEP shareholders.

Dividend: A Double-Edged Sword

One of the most prominent features of IEP is its high dividend yield, currently hovering around 22.25%. This hefty payout entices income investors seeking steady returns. However, the sustainability of this dividend is a major concern.

The high yield is not fully supported by IEP's earnings, raising the specter of potential dividend cuts in the future. Investors should carefully consider the company's ability to maintain this payout before investing solely for the dividend.

Debt and Investment Performance: Cause for Caution

Another cause for concern is IEP's rising debt levels. The company's debt-to-equity ratio has climbed significantly in recent years, potentially limiting its financial flexibility and hindering future growth prospects.

Furthermore, the performance of IEP's core investments, particularly Icahn Automotive, has been underwhelming. A turnaround in these holdings is crucial for the company's overall success.

Analyst Opinions: Divided Landscape

Financial analysts remain divided on IEP's future. Some view the recent strategic shift towards activist investing and the high dividend yield as positive factors. Others remain cautious due to the declining stock price, high debt levels, and uncertainty surrounding the sustainability of the dividend.

Is IEP Right for You? A Careful Consideration

The decision of whether to invest in IEP requires a thorough evaluation of your risk tolerance and investment goals. Here are some key factors to consider:

Risk Tolerance: IEP is a high-risk investment with significant potential for both reward and loss.

Investment Horizon: If you are seeking a long-term investment with the potential for substantial growth, IEP could be a consideration, but only with a strong stomach for volatility.

Income Needs: The high dividend yield is attractive, but its sustainability is uncertain.

Beyond the Headlines: Conducting Your Own Due DiligenceBefore making an investment decision, it is essential to conduct your own due diligence on IEP. This includes:

Researching Carl Icahn's past activist investment successes and failures.

Analyzing IEP's financial statements and debt levels.

Evaluating the performance of IEP's core investments, particularly Icahn Automotive.

Understanding the risks associated with the high dividend yield.

Conclusion: A Complex Investment with Unclear Future

Icahn Enterprises presents a complex investment opportunity. The company's history of success in activist investing, coupled with the high dividend yield, holds potential for significant returns. However, the recent decline in stock price, rising debt levels, and uncertainty surrounding the dividend raise substantial concerns.

Ultimately, the decision to invest in IEP depends on your individual risk tolerance and investment goals. By carefully considering all the factors at play and conducting thorough due diligence, you can make a more informed decision about whether IEP deserves a place in your portfolio.

To stay updated on all economic events of today, please check out our Economic calendar

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Warren Takunda

Stocks

Economic

The relief across world markets as signs of a softening in the U.S. jobs markets strengthens the case for Federal Reserve rate cuts to start later this year remains palpable.

Not only did U.S. 10-year Treasury yields end Friday down 17 basis points , in their biggest weekly drop of the year, but the S&P 500 stock index had its best day in over two months.

Investors in Asia picked up the buy-baton on Monday, sending MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) to its highest in over a year and government bond yields in Europe are lower again .

For sure, public holidays in Japan and Britain make for quieter trade, but there is little doubt the mood music in markets has changed after Friday's news that the U.S. economy created 175,000 new jobs in April, the lowest since October.

Money markets are back to pricing in roughly two 25 bps Federal Reserve rate cuts this year. Last week, traders came close to no longer fully pricing in one cut for the year as nervous markets started to position again for higher for longer rates.

Nonfarm payrolls

Market attention now turns to the Fed's Senior Loan Officer Survey, a closely-watched indicator of credit conditions, expected later in the session.

The last survey, released in February, showed U.S. banks anticipated an increase in demand for loans as rates fall this year.

One key question is whether the improvement in bank lending conditions could be undermined by the rise in government borrowing costs this year, with two-year Treasury yields up 55 bps.

It is also notable that the relief felt across world markets after the latest U.S. jobs data did not last long for some. While dollar/yen fell sharply after those numbers on Friday as markets renewed Fed rate-cut nets, the currency par is 0.5% firmer in early European trade not far off 154.

That essentially means the Bank of Japan, which was suspected to have intervened in currency markets last week to shore up a weak yen, still has its work cut out.

Given that Japanese authorities picked last week's quiet periods to intervene in the currency market, traders will be on high alert through the day.

Elsewhere, China's yuan surged to a six-week high against the dollar, catching up on the first trading day after the long Labor Day holiday, as the central bank set a much strengthened midpoint fixing to track offshore movements.

Apple shares (AAPL.O), meanwhile, could be in focus after news at the weekend that Berkshire Hathaway (BRKa.N) significantly reduced its enormous stake in the iphone maker.

Key diary items that may provide direction to U.S. markets later on Monday:

* U.S. April employment trends, New York Fed's Global Supply Chain Pressure Index for April

* New York Federal Reserve President John Williams, Richmond Fed President Thomas Barkin speak. Swiss National Bank Chair Thomas Jordan speaks

* Chinese President Xi Jinping in France as part of week-long visit to Europe

* U.S. corporate earnings: Tyson Foods, Loews, Microchip Technology, Axon, Vertex Pharmaceuticals, Realty Income, Simon Property, FMC, International Flavors & Fragrances, Progressive Corp, Williams

* U.S. Treasury auctions 6-month bills

Source: Reuters

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Samantha Luan

Economic

Chinese tourists hit the road in greater numbers during a recent five-day Labor Day holiday but kept a tight grip on their wallets, reflecting still-weak sentiment in the world’s second-largest economy.

Travelers made 28.2% more trips but spending only rose 13.5% from the 2019 break, the Ministry of Culture and Tourism said in a statement Monday. This translates to a 11.5% drop in spending for each traveler over the holiday ending Sunday, according to Michelle Lam, Greater China economist at Societe Generale.

“The concern is that per-visitor spending was below 2019 levels, which means in general people are only keen on traveling but not so much on spending money,” Lam said. The 2019 holiday was one day shorter.

The figures add to evidence showing Chinese households remain cautious with consumption despite a recent rebound in economic growth driven by a pickup in industrial activity. Less than one in four residents wanted to spend more while an growing share of the urban population wanted to save in the first quarter, according to a survey by the People’s Bank of China.

China's Thrifty Travelers Show Consumer Confidence Remains Weak_1

Travelers made a total of 20.7 million trips by rail across the country on May 1, a new high for any single day on record, state broadcaster China Central Television reported late Sunday, citing government data.

The holiday season also showed a shift in how Chinese travelers spend since the country reopened from pandemic isolation. While big cities like Beijing and Shanghai remained popular, many more opted for cheaper destinations and small towns, online travel agency Trip.com Group said in a Sunday statement.

“Lower-tier market made a relaxing holiday possible for tourists, and they had better value for money as accommodation and dining costs spiked in tier-1 and tier-2 cities during the break,” Wang Yalei, an analyst with Trip.com, said in the statement.

Social media accounts promoting tourism in small towns have blossomed as tourists look for cheaper, off-the-beaten-path attractions. China’s expanding high-speed rail network and rising car ownership have also enabled travelers to get to more places within hours.

Bookings for hotels and tourist spots in tier-3 or lower-ranked cities in the country’s northwest and west more than doubled during the break from the same period a year earlier, according to data released by Tongcheng Travel Holdings, another tourism agency.

Inbound and outbound tourism also gained momentum during the holiday as China restored more air routes and expanded visa-free arrangements to more countries, the Ministry of Culture and Tourism said. Chinese travelers made 1.9 million trips abroad while 1.8 million visitors entered the country, it said, without providing last year’s numbers.

The US, Australia and the UK were the main long-haul destinations and Hong Kong, Macau, Southeast Asia, Japan and South Korea were the most popular for short-distance trips, according to Trip.com. Middle Eastern countries including Oman, Saudi Arabia and Kuwait saw more than 300% surge in bookings, it said.

Source：Bloomberg

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Thomas

Economic

Central Bank

As the Federal Open Market Committee acknowledges the lack of progress toward its 2% inflation target, I believe that it's becoming increasingly apparent that high-interest rates alone may not suffice in bringing down inflationary pressures.

High-interest rates have traditionally been a go-to tool for central banks in combating inflation by curbing borrowing, spending, and investment.

However, the efficacy of this approach is now being challenged.

One significant limitation lies in the changing nature of inflation drivers. While conventional models primarily focused on demand-side factors, such as consumer spending and wage growth, contemporary inflationary pressures are influenced by an interplay of supply chain disruptions, geopolitical tensions, and structural shifts in the global economy.

These non-monetary factors operate independently of interest rate adjustments, limiting the effectiveness of monetary policy in reining in inflation.

In addition, the transmission mechanism of monetary policy has become increasingly intricate, posing challenges to the impact of high-interest rates on inflation.

In today's complex global economy, domestic interest rate changes may have limited influence when confronted with external pressures.

Global capital flows, exchange rate dynamics, and the interconnectedness of financial markets all contribute to the complexities of transmitting monetary policy impulses.

Therefore, the Fed's ability to control inflation solely through interest rate adjustments is constrained by broader economic forces beyond its control.

Additionally, high levels of debt in the US economy present a significant obstacle to the effectiveness of high-interest rates in curbing inflation.

Both government and household debt burdens weigh heavily, making any increase in borrowing costs potentially detrimental to economic stability. Higher interest rates can lead to increased debt servicing costs, reducing disposable income and dampening consumer spending.

This, in turn, could prompt businesses to scale back investment plans, further suppressing economic activity. Consequently, policymakers face a delicate balance when considering interest rate adjustments to avoid exacerbating existing debt vulnerabilities.

In light of these constraints, it's imperative to explore alternative strategies beyond high-interest rates to effectively manage inflation in the US.

Fiscal measures, such as targeted spending programs and tax policies, can directly influence aggregate demand and inflationary pressures.

By strategically allocating resources towards infrastructure projects, education, and healthcare, policymakers can stimulate economic growth while addressing supply-side constraints that contribute to inflation.

Plus, structural reforms aimed at enhancing productivity and reducing bottlenecks in key sectors of the economy can play a crucial role in containing inflationary pressures.

Investing in innovation, upgrading infrastructure, and streamlining regulatory processes can improve efficiency and mitigate cost-push inflation. Additionally, policies focused on promoting competition and reducing market concentration can foster greater price competition, exerting downward pressure on prices.

Targeted interventions, such as addressing supply chain disruptions and investing in renewable energy sources, can also help alleviate inflationary pressures in specific industries. By addressing these supply-side constraints and promoting sustainable production practices, policymakers can mitigate inflationary risks while promoting long-term economic resilience.

High-interest rates have traditionally been a primary tool for central banks in combating inflation.

But the Federal Reserve – and its major central bank peers – now needs to be realistic with the limitations of high rates in the current economic landscape.

Source: Financial Express

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Warren Takunda

Economic

Cryptocurrency

Bitcoin starts a new week with bullish sentiment back on the radar as $64,000 returns.

In a stirring comeback, BTC price action has managed to leave its latest swing lows far behind it, gaining nearly $8,000 versus the pit of last week’s sell-off.

Despite some of those gains coming during the weekend, they proved to have staying power, and during the May 6 Asia trading session, bears are having no luck pushing the market back down.

The mood is thus considerably different into the second week of May — but increasing greed is already visible.

Can Bitcoin and altcoins manage sustainable momentum toward all-time highs?

This is the question that traders and analysts will be posing after a trip to two-month lows and a considerable flushing out of leverage.

On exchanges, things remain promising — funding rates are neutral, and there are few signs of mass desire to long BTC at current levels.

Should things take a turn for the worse, however, it is key support levels which will come in for a fresh test. These include the short-term holder (STH) cost basis and 100-day moving average — both classic bounce levels.

Cointelegraph takes a closer look at the current state of Bitcoin as the average trader recovers from a hair-raising start to the month.

Bitcoin bulls triumphant after weekly close

The weekend ultimately posed no threat to Bitcoin bulls, providing some unexpected upside that ended up holding into the weekly close. Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_1

Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_1

BTC/USD 1-hour chart. Source: TradingView

This came in at around $64,000 on Bitstamp, data from Cointelegraph Markets Pro and TradingView confirms — around $900 higher versus the end of April.

While not a giant weekly candle, the performance represents an impressive return to form for BTC/USD, which saw a trip to $56,500 in the intervening period.

Unsurprisingly, market observers are quietly optimistic.

“Swept all the liquidity below that was built up over the past 2 months and bounced quickly afterwards,” popular trader Daan Crypto Trades summarized in part of his latest commentary on X (formerly Twitter).

“We're still in the bigger range but at least got some upside momentum going into next week.”BTC/USD chart.

Source: Daan Crypto Trades/X

Tony Severino, founder of crypto technical analysis platform CoinChartist, noted similarities between last week’s snap drop and similar ones during the bull market.

“Every higher swing low in Bitcoin since November 2022 was a weekly hammer,” he revealed over the weekend.

“Is this time different?”BTC/USD chart.

Source: Tony Severino/X

In a prior post, Severino added that price was attempting to reclaim the upper monthly Bollinger Band — something acting as support since February.

“This is potentially a positive development,” he suggested. Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_4

BTC/USD monthly returns (screenshot). Source: CoinGlass

Data from monitoring resource CoinGlass meanwhile puts BTC/USD up 5.8% in May so far, reducing overall Q2 losses to under 10%.

BTC price levels crystalize

Crypto markets are notoriously fickle and an emerging trend can quickly fade, pulling sentiment down with it.

If Bitcoin sees a change of trajectory, traders and analysts will be interested in seeing to what extent nearby support levels succeed at limiting any fresh downside.

Michaël van de Poppe, founder and CEO of trading firm MNTrading, is one commentator highlighting the significance of $60,000 — despite this level offering little consolation to bulls last week.

“Bitcoin above $60K and retail isn't here,” he told X followers about the relative lack of fanfare accompanying the market comeback.

“This range is completely fine as long as Bitcoin holds above $60K. Altcoins slowly waking up.”BTC/USD chart.

Source: Michaël van de Poppe/X

As Cointelegraph continues to report, $60,000 coincides with several trendlines, which have buoyed BTC/USD since the bull market began in early 2023.

These include the 100-day simple moving average (SMA) and STH realized price — the aggregate cost basis of entities holding coins for 155 days or less.

These two levels sit at $60,650 and $59,920 as of May 6, the latter figure provided by statistics resource Look Into Bitcoin.

Bitcoin STH realized price chart. Source: Look Into Bitcoin

In a research note on May 6, meanwhile, financial commentator Tedtalksmacro added the 50-day exponential moving average (EMA) to the mix.

“The 50D EMA stands at $64000 - where BTC is currently trading, a reclaim of that level is significant in defining the high timeframe market structure,” he explained.

“Momentum and trend traders pay attention to the 50EMA when navigating the trend.

”BTC/USD 1-day chart with 50EMA, 100SMA. Source: TradingView

More U.S. jobs data casts shadow over dollar

The upcoming week is relatively quiet when it comes to macroeconomic data, but recent events provide traders more than enough to monitor.

The latest United States employment figures gave risk assets a boost across the board late last week — something firmly on the radar for crypto.

With the Federal Reserve increasingly expected to lower interest rates in the coming months, easing of financial conditions is becoming a question of not “if,” but “when.”

For Van de Poppe, there is even a chance of quantitative easing (QE) making a reappearance — a return to the Fed increasing available liquidity.

“Very significant chance that most of the pain is already in for Altcoins,” he argued.

“Upcoming week is going to be an interesting one, likely we'll see some more upwards momentum as Friday showed the way for the Dollar & Bitcoin with terrible economic data. QE is coming soon.

”U.S. dollar index (DXY) 1-day chart. Source: TradingView

U.S. dollar strength took a hit on the jobs data, with the U.S. dollar index (DXY) declining precipitously to spike to its lowest levels since April 10.

Attention will thus be focused on jobless claims data when it comes to Fed rate cut timing, this due on May 9.

Leverage ignores BTC price rebound

The atmosphere on derivatives markets is noticeably calm as Bitcoin approaches $65,000 — but like sentiment, this could change in an instant.

Current data shows practically neutral funding rates for Bitcoin — possibly, per trading suite DecenTrader, a reflection of speculators licking their wounds. Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_9

Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_9

Crypto funding rates heatmap (screenshot). Source: CoinGlass

“Bitcoin funding rates have returned to a more neutral state after going negative at the end of last week,” an X post confirmed.

“The dip below $60k spooked a lot of traders before price rebounded.”

Others described funding rates as “still healthy” after witnessing a “massive reset” on the way to $56,500.

“Let's hope it can stay that way for a healthy next leg up,” Daan Crypto Trades added.

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

A cursory look at the Crypto Fear & Greed Index provides potential food for thought. Along with the BTC price recovery has come a snapping back of sentiment from “neutral” to “greed” — with “extreme greed” just around the corner.

The Index, which is a lagging indicator, is currently at 71/100, versus just 43/100 on May 2.

Mining difficulty barely due drawdown from record high

$64,000 is not quite enough to allow Bitcoin to avoid a difficulty drop at the next automated readjustment on May 9.

The second readjustment of the new difficulty epoch is currently predicted to see it decrease by around 1.3%, per data from monitoring resource BTC.com.

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

Difficulty is nonetheless at all-time highs, a feat mimicked by hash rate as miners digest April’s block subsidy halving, raw data from MiningPoolStats confirms.

Last week, Cointelegraph reported on miners’ ongoing resilience, showing no signs of capitulation despite market volatility. Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_12

Back to Extreme Greed Past $65K? 5 Things to Know in Bitcoin This Week_12

Source: Cointelegraph

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Samantha Luan

Cryptocurrency

The world’s largest cryptocurrency Bitcoin (BTC) has bounced back strongly from the lows of $57,000 last week and currently consolidating around $64,000 as of press time. Since the fourth Bitcoin halving last month, the BTC price has largely remained range-bound.

Bitcoin Price Capitulation

According to crypto analyst Rekt Capital, Bitcoin has recently completed a price-based capitulation phase known as the Halving Retrace phase, as indicated by the dark blue circle. Moving forward, the focus shifts to the time-based capitulation that the ongoing Re-Accumulation phase (red) will bring.

Rekt Capital suggests that a consolidation period lasting over 150 days after the Halving is in line with historical price patterns. Such a prolonged consolidation phase is viewed as beneficial for the cycle as it moderates the rate of Bitcoin price acceleration.

This extended consolidation period is anticipated to realign the current cycle with historical patterns observed after previous Halving events. This resynchronization is considered a positive development for Bitcoin’s long-term growth and stability within the market.

In March 2024, Bitcoin surged to unprecedented heights, marking new All-Time Highs and indicating a significant acceleration in the current cycle. This milestone was achieved 260 days earlier than the typical trajectory observed in traditional Halving cycles.

However, Bitcoin’s momentum has since stalled, with the cryptocurrency trading within a range of approximately $60,000 to $70,000 for nearly two months. This extended consolidation period has moderated the cycle’s acceleration, bringing it down from 260 days to 210 days compared to historical patterns.

Fed’s Interest Rate Cuts Can Provide Impetus

Bitcoin’s price has been bolstered by growing expectations of a potential rate cut by the Federal Reserve, with markets now pricing in an increased likelihood of a 25 basis point reduction in September. This shift in sentiment has provided support to cryptocurrencies, which typically perform well in an environment characterized by low-interest rates and ample liquidity.

The prospect of a rate cut gains traction amidst signs of a cooling labor market, offering the Fed additional motivation to consider monetary easing. However, this development follows a string of robust payroll reports over the past five months, underscoring the complexity of the economic landscape. Moreover, inflation, a key metric for the Fed, remains above the central bank’s target of 2% annually, further complicating the decision-making process.

Later in the week, members of the Federal Open Market Committee (FOMC), including Thomas Barkin, John Williams, and Neel Kashkari, are scheduled to deliver remarks, providing further insights into the Fed’s stance on monetary policy.