Bitcoin dips below $29,000 as US Nonfarm Payrolls beat expectations

Bitcoin price corrected in the form of a large bearish engulfing candle on the five-minute price chart, in response to the US Nonfarm Payrolls data release for April. The risk asset witnessed a knee-jerk reaction from market participants showing caution towards Bitcoin after the jobs report came in hotter than expected.

Bitcoin price dips below $29,000, US NFP release drives correction

Bitcoin, the largest asset by market capitalization, had climbed in response to the US Federal Reserve’s May 3 interest rate hike. The US Central Bank raised interest rates by 25 bps, meeting market expectations but withdrew wording from its accompanying statement that more tightening would be appropriate, potentially signaling an end to future rate hikes.  This weighed on the US Dollar and lifted Bitcoin to which it is inversely correlated. Nonfarm Payrolls data for April came in hotter than expected. Market participants had been expecting the addition of 179,000 Nonfarm Payrolls in April, and the actual number was 253,000, a deviation that signals a hot job market. The data increased fears of rising inflation, leading traders to shift their stance on risk assets. The US Dollar strengthened after the report, putting further pressure on BTC. Traders witnessed a large bearish engulfing candle on the Bitcoin five-minute price chart below, a knee-jerk reaction to the data.

BTC/USD 5-minute price chart  As seen in the price chart above, a large volume spike was noted on the BTC price chart as the asset nosedived. Bitcoin price is currently below its three key Exponential Moving Averages (EMAs) on the timeframe. A better-than-expected addition of jobs to the US economy signals an increase in purchasing power, considered a catalyst for the US Dollar Index. This implies a decline in demand for risk assets among traders, driving their price lower. Bitcoin bulls were eyeing a retest of the $30,000 level prior to the release of US NFP data. It remains to be seen whether traders can push the asset’s price higher, wiping out the losses from the US NFP release.