Bitcoin saw a rise in price on Friday, thanks to a sharp drop in the dollar, although the cryptocurrency’s outlook remained bleak due to the prospect of high U.S. interest rates.

Traders remained cautious towards cryptocurrencies ahead of key nonfarm payroll data that is likely to impact the outlook for interest rates.

Despite the increase in price, Bitcoin remained close to bear market territory, having tumbled over 20% from its record high in March.

The enthusiasm around Bitcoin investment products, such as spot exchange-traded funds, has also been waning.

These products clocked three straight weeks of declines, having driven Bitcoin prices to record highs in March.

This has kept Bitcoin trading between $60,000 and $70,000 for over a month, although it broke below that trading range this week.

Most altcoins, including Ethereum, Solana, and XRP, tracked gains in Bitcoin, recovering some of the losses seen earlier in the week.

However, the gains were limited by the anticipation of key U.S. nonfarm payroll data, which is expected to impact the outlook for interest rates.

The speculative nature of cryptocurrencies sees them thrive in a low-rate, high-liquidity environment, which may not be possible with the prospect of high U.S. interest rates.

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The nonfarm payrolls data, due later on Friday, is expected to show persistent strength in the U.S. labour market, giving the Fed more headroom to keep rates high for longer.

The central bank had already warned earlier in the week that it had no immediate plans to reduce rates, especially amid recent signs of sticky U.S. inflation.

Stay updated on the latest economic data and central bank announcements to understand how interest rates may impact the cryptocurrency market.