BTC Recovers to $95K as Bargain Hunters Emerge; US Nonfarm Payrolls Report on Friday Will Test the Bounce

Cryptocurrency prices steadied on Thursday, recovering from sharp overnight losses as bargain hunters emerged at lower levels, offering some respite to bitcoin, which was still not far from $95,000.

Bitcoin prices rose 0.5% to $94,086 at the last count, while ether, the world's second largest cryptocurrency, slipped 0.2% to $3,000. Both tokens had slid to multi-week lows earlier in the session.

Among other tokens, XRP rose 0.5%, dogecoin fell 1.2%, and cardano dropped 1.3% in the past 24 hours.

Bitcoin prices had fallen sharply over the past four sessions, shedding over $10,000 from record highs hit last week, as worries over sticky inflation and a hawkish Federal Reserve kept traders on edge.

Those fears were further stoked by a batch of upbeat U.S. data, including a strong ADP employment report, which showed private payrolls increasing solidly in December.

Now, focus will be on the U.S. nonfarm payrolls report, due later in the day Friday, which is expected to show an addition of 164,000 jobs in December, following November's gain of 227,000, as per a Reuters poll.

The unemployment rate is expected to match November's pace of 4.2%, while average hourly earnings are projected to cool slightly to 0.3% month-on-month, down from 0.4%.

A stronger-than-expected jobs report could add to the existing hawkish Fed fears, further increasing inflation-adjusted bond yields.

Rising yields, due to inflation worries, have been complicating matters for risk assets, with bitcoin's rapid descent from $102,000 to $93,000 over the past four days being largely attributed to the sticky price gains.

To illustrate just how bearish sentiment was early today, the funding rate in perpetual markets turned negative, representing a dominance of shorts, that too at a time when BTC is just 15% away from its record high.

However, any sign of weakness in the payrolls figure will likely trigger sharp market reactions, reviving the case for Fed rate cuts and shifting sentiment markedly in favor of risk assets.

If the data misses estimates by a wide margin, BTC could easily make another attempt at $100,000, provided the U.S. government, which holds approximately $18.50 billion worth of BTC, refrains from flooding the market with offers to sell. Stay alert.