Bitcoin, Other Risk Assets Fall Again Following Disappointing Jobs Data
Investors are nervous about rampant inflation prompting yet another massive rate hike by the Fed, and the economic damage that might cause.
Technical TakeBitcoin searching for trading level following release of jobs data
Friday’s labor market report was better than expected, which is bad news for risk assets in the current environment.
The decline in traditional equities is pronounced, though more in aggregate than percentage terms. A few data points stand out in BTC’s hourly chart today.
- Momentum increased prior to the jobs announcement, on a progressively narrower trading range.
- The post-announcement decline was exacerbated by excessive trading volume, which placed downward pressure on prices.
- The volume profile visible range (VPVR) tool highlights the lack of volume between $19,900 and $19,500 for BTC. Prices tend to move rapidly through “low-volume node” areas such as these, in search of an area where a large degree of price agreement exists.
- The move higher during the 14:00 UTC (10 a.m. ET) hour came on lower-than-average volume, which can be interpreted as a bearish signal.
- The relative strength index (RSI), often used to indicate whether an asset is over- or undervalued, only reached oversold levels during the 15:00 UTC (1 p.m. ET) hour.
That BTC prices fell below the next high-volume node at $19,500 is likely concerning for traders because the next price level where significant agreement exists is close to $19,200.
The $19,200 mark is dangerously close to the $19,000 mark where the open interest for put options (which give the right to sell), exceeds that of call options (the right to buy). Breaching this level is likely to put additional weight on the price of BTC.
Investors should monitor BTC’s reaction to moving into oversold territory, particularly in trading volume. Low buying volume at BTC’s current level would indicate more trouble to come, at least in the short term.
On-chain analytics offer a glimmer of hope, as the movement of stablecoins onto centralized exchanges has been increasing, while BTC flows onto exchanges has been falling.
As stablecoins can represent dry powder for investors looking to go long, the recent increase implies bullish sentiment by investors who may simply be lying in wait for their desired price point.
By contrast, the inflows of BTC onto exchanges has declined. Typically, BTC moving to exchanges represents a willingness to sell. The extent to which this changes or stays the same within the next few days will be key to evaluating the next price direction.
