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Non-farm data far exceeds expectations. Why does the crypto market not fall but rise instead?

On Wednesday Eastern Time, the U.S. Bureau of Labor Statistics released data showing that U.S. non-farm employment in January increased by 130,000, far surpassing the market expectation of 55,000. The previous figure for December was slightly revised down to 48,000. This indicates a significant rebound in the U.S. labor market, which not only alleviates concerns about an economic slowdown but also supports the Federal Reserve's policy of maintaining interest rates unchanged. From this perspective, the news is definitely bearish for non-dollar assets. After the data was released, spot gold plunged nearly $40 in the short term, and today during the Asian trading session, it fell another 2%. However, as a risk asset, Bitcoin did not fall but instead rose after the news. What does this imply?

1. The market has already priced in the Federal Reserve holding interest rates steady in March, so the negative impact is limited

Considering that the Federal Reserve cut interest rates twice in December last year and January this year, and given that the new Fed Chair has a generally hawkish stance, the market is not optimistic about a rate cut in March. According to CME rate observation tools: the probability of a 25 basis point rate cut by the Fed in March is 6.0% before the announcement, up from 21.7%; the probability of holding rates steady is 94.0%, up from 78.3%. It can be said that the market has already prepared psychologically for this negative news, so although the non-farm data exceeded expectations and seemed like a big bomb, its actual impact is limited.

2. Bitcoin has undergone sufficient adjustment; short-term decline may have reached its limit?

After a sharp decline in early February, Bitcoin technically even broke below the lower band of the weekly Bollinger Bands. The adjustment has been quite thorough. Many on-chain and exchange whales were liquidated, even the relatively stable ETH funds managed by Yi Lihua have cut losses and exited. The saying “bulls don’t die, bears don’t stop” applies. Now that the bulls are all gone, does that mean the market can no longer fall? Looking at the daily chart, Bitcoin showed a massive volume on February 5 and 6, forming a “bullish engulfing” candlestick pattern, indicating that around $60,000, many investors believe the chips are cheap enough to enter and build positions. From this perspective, Bitcoin may have already reached its short-term bottom. As mentioned in yesterday’s article, $65,000, which is at the lower band of the weekly Bollinger Bands, is a key support level. If broken, a new round of decline could begin. The main players are choosing to defend at this point, which might suggest a bullish outlook in the near future.

3. U.S. CPI data tomorrow night may bring surprises?

Tomorrow night, the U.S. will also release January CPI data. Based on previous market forecasts, there is a high possibility that inflation has peaked. Over the past two Fridays, the market has experienced significant moves. Will tomorrow’s CPI data help trigger a large rebound? Let’s wait and see!