Bitcoin Rally To $125K Challenged By Weak Jobs Data, Traders’ Fear

Main takeaways:

• Bitcoin’s resilience after Friday’s $19 billion crash shows that long-term demand remains strong despite short-term risk aversion.

• Derivatives traders remain cautious, as arbitrage opportunities and negative funding rates indicate increased counterparty risk.

Bitcoin (BTC) has reclaimed the $114,000 mark less than 48 hours after Friday’s flash crash, which wiped out $15 billion of open interest in Bitcoin futures. While Bitcoin has shown resilience following this major liquidity event, several factors could still delay a retest of the $125,000 level.

As long as investors continue to view Bitcoin as a risky asset and maintain its partial correlation with technology stocks, continued bullish momentum will likely hinge on stronger confidence in global economic growth.

US labor market data and US-China relations negatively affect the price of Bitcoin

Concerns about a potential economic slowdown, especially after new signs of weakness in the US labor market, made investors more risk averse. Carlyle estimates that US employers added 17,000 jobs in September, down from an already weak 22,000 jobs in August. According to For the Wall Street Journal.

Demand for US bonds rose, pushing yields to nearly 3.5% as investors accepted lower yields in exchange for the safety of government-backed assets. The move was also prompted by growing concerns that the US-China trade war could intensify on November 10, when a temporary truce limiting tariffs on US imports expires.

US President Donald Trump wrote on Truth Social on Sunday that the “extension should be worked on” as the two countries pursue economic growth. However, no concrete developments have been announced other than plans for talks between the two leaders.

US Treasury Secretary Scott Besent described the controls imposed by China on exports of rare earth elements as “provocative.” Under the new Chinese regulations, foreign companies that produce certain materials will now need an additional export license, even when Chinese companies are not directly involved. China continues to dominate these markets, which are critical to manufacturing technology. According to To Reuters.

Further macroeconomic uncertainty stems from the ongoing US government shutdown, which has delayed the release of key data, including the consumer inflation and wholesale costs report. This lack of visibility complicates the US Federal Reserve’s outlook and makes investors more risk averse ahead of Fed Chair Jerome Powell’s speech on Tuesday.

BTC Derivatives Liquidity Gaps and Regulatory Security Risks

Regardless of the prospects for improved US-China relations, traders remain extremely cautious about Bitcoin derivatives. Some markets still provide arbitrage opportunities, such as differences between perpetual contracts and spot prices on the same exchange. Limited activity from market makers indicates increased counterparty risk.

The perpetual funding rate for Binance’s Bitcoin futures is still negative, meaning short trades (bearish trades) are paying for leverage. Meanwhile, the index has returned to a normal positive range on other exchanges, creating potential price arbitrage opportunities.

Joe McCann, founder and CEO of Ametric Financial, said on Even if these assumptions prove short-lived, traders will likely wait longer before re-entering the cryptocurrency market.

Related to: Centralized exchanges face allegations of significant shortfalls in liquidation numbers

Other market participants have been highly critical of how exchanges handle liquidation triggers and price derivatives. Chris Marszalek, CEO of Crypto.com, urged regulators to “conduct a comprehensive review of the fairness of practices,” citing downtimes that only affect certain users and the lack of compliance measures on “insider trading.”

Bitcoin’s unique qualities, which allow it to potentially benefit from growing demand for rare, independent assets, were not affected by Friday’s flash crash. However, traders’ appetite for risk has clearly diminished in the short term, which could delay the journey to a new all-time high by several weeks or months.

This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.