How will Powell's speech and non-farm payrolls affect the crypto market?

Author: Danny Park, The Block; Compiler: Wuzhu, Golden Finance

BTC and Ethereum gave up some of their gains in the Asian session on Monday as the market focused on the upcoming speech by US Federal Reserve Chairman Jerome Powell and the US labor market data expected to be released on Friday.

The price of Bitcoin fell 2.09% in the past 24 hours to around $64,403. On Friday, the world's largest cryptocurrency reached nearly $66,500, the highest level since late July, after the release of lower-than-expected personal consumption expenditures (PCE) data. China also announced a series of powerful stimulus measures to revive the economy.

“Bitcoin appears overbought on the daily chart, with prices retreating after reaching a high of $66,498 on Friday,” said Rachael Lucas, a cryptocurrency analyst at BTC Markets. “Momentum has lost momentum since [last week].”

ETH is also struggling to regain momentum, Lucas said, losing its upward momentum after falling below its 50-day simple moving average last week. Ethereum prices fell 1.69% to $2,626 over the past 24 hours.

Powell Speech and Nonfarm Payrolls

Meanwhile,Investors are focused on two key macroeconomic events this week – a speech by Federal Reserve Chairman Jerome Powell to the National Association for Business Economics later today and the U.S. nonfarm payrolls report on Friday.

Powell is expected to speak about the economic outlook and may provide insights into the Fed’s monetary policy. Lucas said: "Powell's comments, especially on inflation and interest rates, tend to move markets, and cryptocurrencies are no exception. Any hawkish tone could further fuel risk aversion, leading to today's decline."

However, Augustine Fan, head of insights at SOFA.org, said Powell is unlikely to make any market-moving remarks. "Investors may expect him to make more of the same comments as the last FOMC meeting, especially since the last dovish Q&A, and recent inflation data has been favorable to him."

The U.S. Department of Labor will release its monthly non-farm payrolls report this Friday, which provides a snapshot of the U.S. job market and overall economic strength. Although the data for August showed a weak U.S. labor market, Lucas of BTC Markets said the market expects the data for September to improve. "Stronger-than-expected jobs data is likely to reinforce the Fed's current rate policy, potentially benefiting risk assets such as Bitcoin and Ethereum," Lucas said.

As far as cryptocurrency prices are concerned, the market is likely to remain bullish in the short term. "As crypto correlations with macro assets remain elevated, especially compared to the SPX, we believe the friendly macro backdrop will continue to be a strong driver of cryptocurrency prices in the fourth quarter," Fan said. "In addition, With the Kamala camp paying lip service to crypto 'support' in their campaign rhetoric, we remain bullish on price action in the near term, and targeted bearish selling strategies may be popular as investors shift into 'buy the dip' mode."