Will Bitcoin Break Above $30K? New JOLTS data, weaker chances of dollar appreciation
On April 4, the U.S. dollar index ( DXY ), which measures the greenback’s performance against a basket of six leading foreign currencies, fell 0.5% after demand for workers in the world’s largest economy fell.
BTC price eye breakout with dollar at 2-month low
Bitcoin (BTC) has gained 3.5% since then to around $28,800, continuing its extremely negative correlation with the dollar. The BTC/USD pair is now seeing a breakout of $30,000, a psychological resistance level, on hopes that the dollar will weaken further in 2023.
Meanwhile, the Job Openings and Labor Turnover Survey (JOLTS) showed in February that the number of official vacancies fell below 10 million for the first time since May 2021.
In other words, while there were two job vacancies for every unemployed person at one point last year, there are now just 1.67.
Interestingly, the implied federal funds rate for January 2024 fell after the latest JOLTS data, in a similar fashion amid March’s bank failures.
Interest rate expectations are now around 4% compared to around 5% before the banking crisis, suggesting that the market expects the Federal Reserve to halt, if not reverse, its rate hike program.
Worth noting is that the JOLTS readings are retrospective, meaning the latest data does not include March’s sudden wave of bank failures and well-publicized layoffs at McDonald’s, Walmart and across tech companies, including Amazon and Apple.
Thus, the market is likely to see even worse JOLTS data in the coming months. This could also coincide with the next Federal Open Market Committee meeting in May, prompting a dovish response, as a Reuters survey of currency strategists expects.
Lower rates should push the dollar lower and in turn Bitcoin higher, as long as their traditional inverse price correlation remains.
Bitcoin price painting bullish continuation pattern
From a technical perspective, the Bitcoin price is looking at an extended price rally in April as it paints an ascending triangle pattern.
Related: Bitcoin breakout ‘matter of time’ says analysis with BTC price at $28K
An ascending triangle is a bullish continuation pattern that appears when the price trends between a horizontal trendline resistance and an ascending trendline support.
It is completed when the price breaks out of the triangle in the direction of the previous trend and rises by as much as the maximum height of the triangle.
Applying the scenario to the ongoing BTC price trend gives $31,000 as its next upside target, up around 8.5% from today’s price level.
Meanwhile, the DXY has the potential to fall another 1% in April to test the lower area of its long-term support channel (purple) around 100.86.
The lower interest rate scenario risks pushing DXY below the support channel to a new annual low target with some analysts predict a drop against 95.
Ultimately, such a scenario would likely mean another move up for cryptocurrency markets, and a potential $35,000 target for Bitcoin in Q2.
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making a decision.
