Disclaimer: This is not financial or investment advice. You are responsible for any capital-related decisions you make, and only you are accountable for the results.

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TLDR:

• Labor data tops expectations; Fed pause is reinforced, lowering near-term cut odds.
• Bullish BTC outlook; Anticipated recovery from $90k to $94k.
• Strategy remains range-bound; Monitoring flows and on-chain signals.

Jobs Data

• Non Farm Payrolls: Forecast 45k, Actual 50k
• Unemployment Rate: Forecast 4.6%, Actual 4.4%

The data comes in stronger than expected with 50k jobs added, but the Unemployment Rate ticking down to 4.4% - forecasts were for 4.6% for rounding, with 4.5% also possible. Alongside this, the Participation Rate moved down from 62.6% to 62.4%, whilst Average Hourly Earnings moved higher to 3.8% YoY, whilst expectations were for 3.5%. Note, November’s Payroll numbers were revised slightly lower to 56k, down from 64k.

This is a strong report.

What This Means?

Considering the US government reopened on November 12th (following the 6 week shutdown), the Fed and markets will want to see more data in the coming months to confirm that the labour market is holding up, despite the job growth number coming in at 50k.

The labour market is holding up better than expected and this enables the Fed to stay on pause (not lower interest rates) at their late-January Meeting, and it also slightly reduces the odds of an interest rate cut at their March Meeting. We can see this in the slight increase in the US2Y Yield - a move up of 2 basis points.

All of this is in line with our thinking - the Fed is on pause for now, but will likely get back to lowering rates under a new Fed Chair from mid-May onwards once Powell is replaced. But note: a new Fed Chair will likely be uber-dovish, and therefore markets will begin pricing in more easing (of rates) before rates cut actually begin again.

Market Reaction:

Going into the print, had pulled back slightly over the past few days whilst Bond Yields and the Dollar (the Dollar Index - DXY) moved higher. But, a labour market that is holding in there (as proven by today's print) reduces the likelihood of near-term interest rate cuts, which as a result, sees risk assets pull back a touch, but not much.

Our expectation is that this pull back in risk assets (for BTC, $94k to $90k) will be bought, as the market had somewhat priced in an Unemployment Rate that would be 'hanging in there', and this will now be a market clearing event that the market can move on from, despite the Fed now very likely to not cut in January - but again, the market already expected this.

Our view?

We expect risk assets to quickly move on from this, and a new local rally (from $90k for BTC) to $94k in the coming week or so.

Positioning:

We remain tactical here playing the range. To us, it's key we see an improvement in the flows to support a move higher in price. Some of the metrics we're watching and looking for improvements in, are as follows:

• Improved ETF inflows.
• Long-Term Holders easing up on their selling.
• A negative Coinbase Premium closing, and preferably back to positive.

For traders:

A possible play is a BTC buy at $90k-$91k, for a move back up to $94k. Beyond that? We'll have to see how it develops, and if the metrics improve. For us, that would be the signal that the $95k resistance can be broken and price can continue on higher.

Cryptonary’s Take:

This data increases the odds of the Fed holding rates unchanged at their late-January Meeting, and it also slightly reduces the odds of them remaining on pause at their mid-March Meeting as well. However, there will be a lot more inflation and labour market data to come out between now and then, so this can absolutely change.

It's very possible that we've seen the last interest rate cut from Chair Powell, and the next one comes from a new Fed Chair. But remember, a new Fed Chair will likely be uber-dovish, and the market will likely price in increased rate cuts before a new Fed Chair even delivers a cut.

For now, we're still cautious, but in an opportunistic way.

Traders can attempt a play at a BTC Long from $90k to $94k. But, we'd have to reassess the metrics upon a potential revisit of $94k. Should price break below $90k, or reject at $94k again (we'd then expect lower), we'd then be targeting the mid-$80k's for BTC again.

Cryptonary, OUT!