Today, the new updated data on the US non-farm payroll will be released, and this could increase the volatility in the price of Bitcoin.
In recent days, volatility has decreased a bit, after the declines on Monday and Tuesday that brought it back below $62,000.
Summary
- The non-farm payroll data is coming and the potential impact on the price of Bitcoin (BTC)
- The monetary policy of the Fed
- The volatility of Bitcoin expected at the release of non-farm payroll data
- The international situation
The non-farm payroll data is coming and the potential impact on the price of Bitcoin (BTC)
The data on nonfarm payroll and the unemployment rate in the USA is expected today at 14:30 CET (Central European Time).
This is an important data point concerning the labor market, and therefore indirectly the Fed’s monetary policy.
In fact, the central bank of the United States does not have as its sole objective to maintain consumer goods price inflation around 2%, but also to promote full employment.
So when the unemployment rate is high, or the labor market is stagnant, it intervenes to encourage a recovery.
Currently, the unemployment rate in the USA is 4.2%, but a year ago it was lower (3.8%).
The post-pandemic minimum peak was reached in April of last year when it had fallen to 3.4%. Before the pandemic, in February 2020, it was 3.5%.
It is therefore possible that the Fed is considering intervening to encourage a return to 3.5%, and if the unemployment rate in September turns out to be higher than the 4.2% of August, it would be more motivated to do so. Note that the markets predict that in September it remained at 4.2%.
If the actual data released today is greater or less than 4.2%, the volatility in the markets could increase.
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The monetary policy of the Fed
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After the first interest rate cut of 50 basis points in September, no FOMC meetings are scheduled in October to decide on any further cuts.
The next cut will arrive on November 7, and the markets are increasingly convinced that this time it could be only 25 basis points.
The fact is that the more interest rates are cut, the more liquidity increases in circulation, and financial markets depend enormously on liquidity.
This means that if the data released today were to lean towards greater interventionism by the Fed, the markets could quickly change their minds and start pricing in another 50-point cut in November as well. This could paradoxically spread a bit of optimism in the markets, even if it would mean an increase in unemployment.
The president of the Fed, Jerome Powell, has recently stated that another 25 basis point cut might not be necessary, and this is why the markets are currently a bit more cautious.
The volatility of Bitcoin expected at the release of non-farm payroll data
Regarding Bitcoin the point is that the options expiring are traded at a higher implied volatility (IV) compared to those expiring at the end of the month.
The so-called annualized IV kink at this moment is 51.44%, which is quite high.
So currently the implied volatility is significantly higher than the real one, and this suggests that there could be an increase in volatility in the short term.
If, however, the data that will be published today regarding the non-farm payrolls in September in the USA were to be perfectly in line with the forecasts, and with those of the previous month, the reaction of the markets could also be minimal.
It should also be added that an increase in volatility is expected next week as well, so it might just be a matter of time, even if this increase does not happen today.
Tendenzialmente infatti i mercati sono abbastanza bravi a prevedere i dati economici statunitensi, quindi è probabile che abbiano visto giusto ed i dati di oggi siano in linea con quelli di agosto.
The international situation
Perhaps the markets at this moment are just looking for an excuse to increase volatility.
This excuse could come today, if the non-farm payroll data were different from expectations, but it could also come in the coming days, for example due to the international geopolitical situation.
For example, on Tuesday, October 1st, with the missile attack by Iran against Israel, the price of WTI crude oil suddenly jumped from $67 per barrel to $71, and then further increased in the following days to the current $74.
This is a price that had not been seen since September 2, and it is 13% higher than the lows of last month reached on September 10 at $65.
This rise in recent days quite well measures the increase in market concerns about the developments in the Middle East, and the fact that the current price of WTI oil is still much lower than the annual highs of $87 reached in April suggests that there may still be ample room for growth.
Many expect a reaction from Israel, which in turn could cause a further reaction from Iran. In such a situation, it is more than obvious to expect an increase in volatility sooner or later.
