Crypto prices experienced a rollercoaster week, with Bitcoin facing volatility following the unexpected US employment data and increasing bets on a Federal Reserve rate hike. While Bitcoin showcased resilience, other altcoins stole the spotlight with remarkable performances. 

Bitcoin’s rollercoaster ride

Bitcoin price flactuation

On October 6, Bitcoin briefly dipped to $27,000 as unexpected US non-farm payroll (NFP) numbers rattled the markets, causing a 2.1% price drop in a single hourly candle. This plunge was a stark reminder of the cryptocurrency’s sensitivity to external economic factors.

Despite the initial setback, Bitcoin price quickly rebounded, with bulls recovering the losses. The price surged back to $27,700, a key area of interest before the NFP data release. This quick recovery showcased Bitcoin’s resilience in adverse market conditions.

US jobs data impact

Expected US jobs in Sept increase to 336,000

The sudden price drop was triggered by US NFP numbers, which showed a substantial increase of 336,000 jobs for September, nearly double the expected figure of 170,000. 

This surprising surge indicated the labor market’s resilience to the Federal Reserve’s anti-inflation measures, particularly interest rate hikes.

The unexpected NFP data raised concerns among investors, with some interpreting it as “bad news” for risk assets, including cryptocurrencies. The belief was that a strong labor market might lead to further interest rate hikes by the Federal Reserve. 

This sentiment was reflected in the market, with probabilities of a November rate hike rising from 25% to 31.3%, according to CME Group’s FedWatch Tool.

To gain a clearer view of inflation and its potential impact on Fed policy, market participants eagerly await the release of the Consumer Price Index (CPI) data. CPI is a key inflation indicator the Federal Reserve uses to inform its policy decisions. 

Any significant changes in CPI could further influence market sentiment and expectations regarding interest rates.

Bitcoin open interest and market sentiment

Bitcoin open interest and market sentiment

Bitcoin’s reaction to the NFP data included a notable decline in open interest (OI), as shown by data from popular trader Skew. 

This suggests that spot and derivatives traders exited positions in response to the market turbulence. 

A shift in probabilities regarding a November rate hike was noted, but market participants emphasized monitoring the Federal Reserve’s tone and posture for a more accurate assessment.

The Kobeissi Letter, a financial commentary resource, highlighted that the Federal Reserve was now facing pressure from the markets and its previous projections. 

The expected pause in rate hikes, previously anticipated until June 2024, has been extended to July 2024. This shift in expectations had an immediate impact on market futures, causing a substantial drop.

Altcoins shine amidst volatility

Altcoins shine and volatility

While Bitcoin faced volatility, some altcoins experienced remarkable gains. Solana (SOL) and Avalanche (AVAX) were standout performers, both registering 16% surges over the week. 

The increasing popularity of platforms like the Stars Arena, which utilizes AVAX tokens, likely contributed to this growth.

The strong performance of altcoins like Solana and Avalanche indicates a potential shift in investor focus and diversification away from mainstream cryptocurrencies like Ethereum. 

Investors are increasingly exploring opportunities beyond Bitcoin and Ethereum, seeking higher returns and unique projects.

Also read: Will Shiba Inu reach 1 Cent by 2025 or 2030?

The road ahead for crypto prices & investors

The cryptocurrency market remains dynamic and responsive to external factors, as we’ve witnessed numerous times. 

Bitcoin’s recent volatility, driven by unexpected US jobs data and rate hike speculations, is a testament to this. Altcoins continue to attract attention, with notable performances by Solana and Avalanche, hinting that investors might be moving their money to Altcoins, begging the question of whether an Altcoin season is fast approaching. 

Finally, as we move forward, it’s crucial for investors to monitor not only crypto price movements and whale movements but also fundamental events, such as inflation data and Federal Reserve decisions.