In the past few days, the community has been filled with sorrow, and many people have privately messaged me: Henry, clearly $BTC is about to break 69,000, how did it lose momentum overnight?
The answer is simple: it was smashed by the data.
I have always emphasized that when trading, don't just fixate on K-lines; macro data is the invisible hand. The non-farm payroll report (NFP) for January published yesterday was a cold splash of water from the Federal Reserve to the market.
Let's first look at the hard data, don't believe those ambiguous news releases:
New non-farm payrolls: The market originally expected only 70,000 people, but the actual number turned out to be 130,000. This is not just exceeding expectations; it's a direct doubling.
Unemployment rate: decreased from 4.4% to 4.3%.
Hourly wage growth: increased by 0.4% month-on-month, also higher than the expected 0.3%.
What does this mean? It means the U.S. labor market is as solid as a rock. As long as employment is so strong, Powell has no reason to rush to cut interest rates. Previously, the market was fantasizing about a rate cut in March; now, with this report, the probability of a March rate cut in the CME interest rate futures market has dropped to zero, and even May is in jeopardy. The mainstream expectation has now been pushed to July.
Reflected on the market, this is a typical 'bullish for the dollar, bearish for the crypto market.' Before the data was released, $BTC was still holding above $67,000, even testing the resistance of $69,000 at one point. Once the data came out, the dollar index (DXY) surged directly, U.S. Treasury yields skyrocketed, and $BTC dropped sharply, breaking the support level of $66,800.
I looked at the on-chain data; although this wave of decline is not catastrophic in magnitude, it is extremely damaging. In the past 24 hours, the total liquidation volume across the network surged, and the fear index dropped directly into the 'extreme fear' range. Even worse, this decline is accompanied by signs of ETF capital outflow, indicating that institutional funds are seeking safety.
Many people will ask at this time: 'With such good fundamentals, why isn’t the price of cryptocurrencies rising?'
Remember this logic: Until inflation is fully resolved, a strong economy is bearish for risk assets. A strong economy means the Federal Reserve not only won't ease but will also continue to maintain high interest rates (High for Longer) to suppress inflation. The current funding rate says it all; bullish sentiment is quickly waning.
What’s the strategy moving forward? Don’t rush to catch the bottom. The current macro environment does not support a V-shaped reversal. As long as the unemployment rate is at 4.3% and 130,000 new jobs are presented, the tightening liquidity constraint cannot be lifted. For us old investors, the task now is not to bet on a rebound but to preserve capital and wait for the real 'liquidity turning point' to appear.
In short, recognize the reality; the dream of a March rate cut is shattered. Just patiently endure this period of volatility.
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