The cryptocurrency market gave back some of last week's gains during Monday's Asian morning session, with analysts noting that the upward momentum for Bitcoin and Ethereum has weakened. Investors are focusing on the upcoming speech by Federal Reserve Chairman Jerome Powell and the U.S. labor market data to be released on Friday, both of which could impact the market.
According to data from The Block, the price of Bitcoin (BTC) fell by 2.09% in the past 24 hours to around $64,403. Last Friday, Bitcoin rose to nearly $66,500 after the release of lower-than-expected Personal Consumption Expenditures (PCE) data, marking its highest level since the end of July. China also announced a series of strong stimulus measures last week to revive its economy.
Rachael Lucas, an analyst at Australian cryptocurrency exchange BTC Markets, stated, "Bitcoin shows overbought conditions on the daily chart, with its price retreating after hitting a high of $66,498 on Friday. Since then, momentum has weakened." Lucas noted that Ethereum is also struggling to regain momentum after breaking above the 50-day Simple Moving Average (SMA) last week. According to The Block data, the price of Ethereum (ETH) dropped by 1.69% in the past 24 hours to $2,626.
Powell's Speech and NFP
Investors are focused this week on two key macroeconomic events—the speech by Federal Reserve Chairman Powell at 1:55 AM Taiwan time on Tuesday at the National Association for Business Economics (NABE), and Friday's U.S. Non-Farm Payroll (NFP) data. There are expectations that Powell will discuss the economic outlook and may provide insights into the Fed's monetary policy.
"Powell's comments, especially regarding inflation and interest rates, typically move the market, and cryptocurrencies are no exception," Lucas said. "Any hawkish tone could further exacerbate risk-off sentiment, leading to today's decline." However, Augustine Fan, head of insights at SOFA.org, indicated that Powell is unlikely to make any comments that would impact the market, "Investors may expect him to reiterate similar sentiments based on the last FOMC meeting, especially since the recent inflation data has been favorable for him since his last dovish Q&A."
The U.S. Department of Labor will release the monthly Non-Farm Payroll report this Friday, which provides an overview of the U.S. job market and overall economic strength. While August's data showed weakness in the U.S. labor market, BTC Markets' Lucas stated that the market expects improvements in September's data, "Stronger-than-expected employment data could reinforce the Fed's current rate stance, which would be a potential positive for risk assets, including Bitcoin and Ethereum."
Regarding cryptocurrency prices, Fan from SOFA.org stated in an interview with The Block that the market may remain bullish in the short term, "As cryptocurrencies maintain a high correlation with macro assets, particularly relative to the SPX (S&P 500 Index), we believe a favorable macro backdrop will continue to provide strong support for cryptocurrency prices in the fourth quarter." Fan added:
"Additionally, due to Kamala Harris's camp talking a lot about 'support' for cryptocurrencies in campaign rhetoric, we remain optimistic about recent price trends, as investors shift to a 'buy the dip' mode, targeted put-selling strategies may become popular."