Bitcoin price struggles after hot US NFP data

• The US economy added 339,000 jobs in May, beating market expectations of 190,000. 
• May US NFP data release signals a hot job market, with experts saying it is consistent with a soft landing for the economy.
• Annual wage growth has slowed, pointing at cooling inflation pressures and thus less likelihood of a rate hike. 

Bitcoin price experienced a pullback after a mixed US NonFarm Payrolls report for May. While typically a hot job creation print doesn’t bode well for Bitcoin in the short term, slowing wage growth could make a difference and signal a recovery ahead.

Similar to the situation in April, the number of jobs added far exceeded market expectations, but a slowdown in annual wage growth feeds a bearish thesis for the US Dollar index as it points to cooling inflation pressures. 

This could benefit risk assets like Bitcoin, which saw in May its first monthly loss of 2023. 

Also read: Breaking: US Nonfarm Payrolls rise 339,000 in May vs. 190,000 expected

Bitcoin price analysis: Comparing April’s job release with May 

Last month, based on the Bitcoin/USD one-day price chart from Bitstamp, Bitcoin price experienced a pullback in response to April’s job report. Back then, a better-than-expected reading led to a decline in Bitcoin prices that lasted for the remainder of the month, a pullback from which Bitcoin is yet to recover.

With May payrolls also beating expectations by a wide margin, a similar reaction for Bitcoin price could be expected in June. But there is a key metric that could change this bearish outlook: slowing wage growth.

Despite the headline hot print on job creation, annual wage growth in the US moderated to 4.3% YoY, making it more difficult for the Federal Reserve to hike interest rates further as this metric signals that inflationary pressures are cooling. A pause in the Fed rate-hiking cycle is likely to benefit risk assets like Bitcoin.

Bitcoin/USD one-day price chart 

According to the latest Nonfarm Payrolls, the job market is slowing down to a ‘Goldilocks level’ – not too hot nor too cold. For markets, it means ongoing growth but with lower inflation and interest rates. For the US Dollar, it means the path of least resistance is down

FXStreet senior analyst Yohay Elam said.

With the US Dollar eyeing a path of decline, risk assets like Bitcoin are likely to begin their recovery in June, wiping out losses registered in May. Market participants’ knee-jerk reaction to the data release was to push BTC to $27,000. The level acted as crucial support, making it  rebound to $27,106, likely coiling in preparation for a bullish recovery in June.

The monthly high recorded in June so far is the $27,357 level. The two long-term Exponential Moving Averages (EMAs), 10-day at $27,117 and 50-day at $27,114, are the immediate resistances for Bitcoin on its path to recover to this monthly high.

Bitcoin/USD five-minute price chart

Combined with a lower than expected wage growth and likely fall in the US Dollar, Bitcoin holders could expect a recovery in the risk asset in June. 

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