Bitcoin falls back on a stronger dollar

US employment strengthens the dollar and pressures bitcoin, but on-chain signals and key supports keep hope alive.

The price of bitcoin experienced a -1.95% decline, closing at USD 95,060.61, influenced by robust US labor data and the strengthening of the dollar. However, technical and on-chain indicators suggest that the upward trend could continue.

Despite bearish pressure, Bitcoin buyers successfully defended the EMA50 support at $94,400 / TradingView

The dollar dominates the scene against bitcoin

The publication of labor data in the United States negatively impacted the price of bitcoin. Unemployment benefit applications fell to 201,000, below market expectations of 218,000. This data, coupled with the resilience of the labor market, pushed the dollar index (DXY) to 109 points, a two-year high, putting pressure on bitcoin and other cryptocurrencies. Speculation about a more aggressive tariff policy by the new US administration is also boosting global demand for dollars.

Jobs data: a double-edged sword

While the strength of the labor market strengthens the dollar, it also limits the ability of the Federal Reserve to implement interest rate cuts. A contrasting figure was the ADP private payrolls data, which showed a plunge to 122,000 new jobs, below expectations of 140,000 and the previous figure of 146,000. This data partially cushioned the fall of bitcoin, as investors eagerly await the crucial non-farm payrolls (NFP) data next Friday.

In the week ending January 4, seasonally adjusted initial jobless claims were 201,000, a decrease of 10,000 from the previous week's unrevised level of 211,000. The 4-week moving average was at 213,000, a decrease of 10,250 from the previous week’s unrevised average of 223,250.

Bitcoin defends itself at key support

Despite the bearish pressure, Bitcoin buyers successfully defended the EMA50 support at $94,400. The daily candle, although bearish, showed a significant lower wick, indicating buying interest at lower levels. Trading volume surpassed the 25-day average (25.91K vs 33.82K on Binance), suggesting increased interest in the current market direction. Bitcoin remains above both the EMA50 and the EMA200 ($77,800), indicating a persistent long-term uptrend. Key resistance now lies at $102,400. The large gap between the EMA50 and EMA200 indicates a strong uptrend ahead.

On-Chain Analysis: Cautious Optimism

CheckonChain's on-chain Realised Profit/Loss Ratio indicator stands at 1.0858 points. This means that more profits are being realized than losses, reflecting a generally positive sentiment in the market. Investors are taking small profits by selling, suggesting moderate profit-taking and some caution. This value does not indicate an extreme overbought or oversold signal, nor a drastic trend change, but rather a consolidation phase.

Although the dollar strength and jobs data put pressure on bitcoin, the defense of key support, increased volume and slightly positive on-chain sentiment suggest that the uptrend could continue. Investors will be keeping an eye on upcoming economic data and price action at the resistance of $102,400.

Disclaimer: This analysis is provided for informational purposes only and does not constitute financial advice. Cryptocurrency trading is highly volatile and involves risk. Please conduct your own research and consult with a financial advisor before making any investment decisions.