Bitcoin has caught the attention of investors once again, as recent US labor data suggests a cooling job market, sparking expectations of an imminent interest rate cut by the Federal Reserve. The US Labor Department reported a significant drop in nonfarm payroll growth for January, with only 143,000 jobs added—far below December’s 256,000 and the Wall Street projection of 169,000. At the same time, the unemployment rate decreased from 4.1% to 4%, indicating a slight improvement in employment.
Implications for the Federal Reserve and Bitcoin
The labor market’s continued stability has raised expectations that the Federal Reserve may soon reduce interest rates. Lower interest rates typically make riskier assets, such as Bitcoin, more attractive to investors seeking higher returns.
Following the release of the job data, Bitcoin’s price surged to $98,497, up from a 24-hour low of $95,707.35. As of the latest update, Bitcoin is trading at $97,949.
Bitcoin Futures Open Interest also saw a notable increase, signaling growing investor interest and leading some analysts to predict a bullish trend in the crypto market.
Broader Market Reactions
The broader financial market responded to the job report as well. The 10-year US Treasury Bond yield climbed 0.77%, reaching 4.471%, and the US Dollar Index rose 0.23% to $107.790. Despite these movements, the CME FedWatch Tool still shows only a 10.5% probability of a 25 basis point rate cut at the Federal Open Market Committee (FOMC) meeting scheduled for March.
In late January, Federal Reserve Chairman Jerome Powell emphasized that inflation and economic conditions would need to show consistent progress before any rate cuts would be considered. “We need to see more evidence that inflation is on a sustainable path to 2% before considering rate cuts,” Powell said during the last FOMC meeting.
Bitcoin’s Outlook Amid Uncertainty
Despite the uncertainty surrounding rate cuts, some crypto experts remain optimistic about Bitcoin’s future. A market analyst, Mister Crypto, described the latest job data as “BULLISH FOR CRYPTO” in a post on X (formerly Twitter). Many traders interpret a weakened job market as a sign that rate cuts are on the horizon, further enhancing Bitcoin’s appeal as an investment vehicle.
However, the market could experience short-term volatility, particularly with the upcoming expiration of large Bitcoin (BTC) and Ethereum (ETH) options contracts, which may lead to additional price fluctuations.
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