Key Market Developments
- •Bitcoin has mirrored US stock market movements, erasing recent gains as concerns over the US economy intensify.
- •While odds of a Federal Reserve interest rate cut are slowly increasing, analysts warn that risk assets might face unexpected challenges.
- •JPMorgan analysts have revised their outlook, now considering Bitcoin undervalued relative to gold.
BTC Price Trends Downward Alongside Stocks
Bitcoin (BTC) experienced a dip below $102,000 during Thursday's Wall Street trading session, coinciding with a downturn in US stocks. Data from Cointelegraph Markets Pro and TradingView indicated that BTC/USD saw losses approaching 2% on the day.
The decline in Bitcoin's price followed a broader market trend, as major indices like the S&P 500 and Nasdaq 100 also moved lower. Market participants reacted to recent economic news, including reports of significant job cuts and a rise in US household debt.
A report released by employment firm Challenger, Gray & Christmas revealed that over 153,000 job cuts were announced in October, marking the highest figure for the month since 2003. Chief revenue officer Andy Challenger commented on the trend, stating, "October’s pace of job cutting was much higher than average for the month."
In the absence of official government employment data due to the ongoing shutdown, these figures had a notable impact. The trading resource The Kobeissi Letter suggested via X (formerly Twitter) that the economy might necessitate additional interest-rate cuts from the Federal Reserve. The firm commented on the Fed's easing of financial conditions, stating, "A new era of monetary policy has arrived."
Concurrently, trading company QCP Capital highlighted that a rate cut by the Federal Reserve at its December meeting, which is often seen as a positive catalyst for crypto and other risk assets, was not a certainty. In their latest "Asia Color" market update, QCP Capital noted, "Markets are now pricing 60–65% odds of a follow-up move, but the longer the blackout drags on, the more comfortable policymakers may become with pausing, which in turn keeps the dollar firm and credit conditions tight."
Data from CME Group's FedWatch Tool indicated that, at the time of reporting, the probability of a 0.25% interest rate cut in December stood at 69%.
JPMorgan Re-evaluates Bitcoin Against Gold
QCP Capital further elaborated that for Bitcoin to experience a sustained recovery from its recent multi-month lows, a return of institutional buying would be crucial. They referenced outflows from US spot Bitcoin exchange-traded funds (ETFs), which amounted to nearly $900 million in the first three days of the week.
The firm summarized, "The $100,000 psychological threshold now represents the key line in the sand, and any stabilization in ETF flows could quickly flip sentiment, assuming no fresh macro shock emerges."
As previously reported, traders had maintained price targets below $100,000 for BTC throughout the week. A widely discussed level was the open "gap" in CME Group's Bitcoin futures near $92,000, which was seen by many as a potential floor.
On a more positive note for the day, a report from JPMorgan presented a bullish outlook on Bitcoin. Analysts at the firm described BTC as being more attractive than gold following its recent price decline. Lead analyst Nikolaos Panigirtzoglou was quoted by MarketWatch and other publications, stating, "Having been $36,000 too high compared [with] gold at the end of last year, Bitcoin is now around $68,000 too low."