Odds for 3 Fed Rate Cuts Rise on Weak Jobs Data, What’s Next for Bitcoin?

Key Insights:

• Odds for three Fed rate cuts could appear clear after weak nonfarm payrolls and unemployment data.
• The August ADP Employment Change and Initial jobless claims reports showed a weakening labor market in the U.S.
• BTC price rose above $113K after the US Jobs data, with analysts suggesting continuing volatility.

The odds for three Fed rate cuts have bounced back after recent jobs data that signaled a weakening labor market in the United States. The latest US nonfarm payrolls data also came in lower-than-expected, which is expected to help rebound in Bitcoin, Ethereum, and altcoins.

US Jobs Report Hints at Fed Rate Cuts

Automatic Data Processing released the August Employment Change report on September 4. Labor market growth slows significantly in the United States, adding just 54,000 jobs.

This is consistent with other jobs data suggesting a softening of the US labor market. As The Coin Republic reported, the US JOLTS Job Openings data declined to 7.181 million, lower than the expected 7.5 million.

This led to a modest upside momentum in the market. The market also eagerly awaited the August nonfarm payrolls print and unemployment rate for market direction and potential Fed rate cuts in September.

The Wall Street expected Nonfarm payrolls data to come in at 75K, rising more than 73K in July. However, the number showed that the economy has added only 22k jobs, far below the market forecast.

Bitcoin and the broader crypto market recovered soon after the US nonfarm payrolls data.

Jobless Claims Rise Shows Weakening Labor Market

Initial jobless claims in the US jumped by 8,000 from the previous week to 237K, as per the U.S. Department of Labor report today. This was the most notable increase in over two months, against the 230K expectations.

At the time of writing, the CME FedWatch Tool showed more than 89% probability of a Fed rate cut by 25 bps on September 17. Moreover, the odds of Fed rate cuts this year have increased to three at the time of writing.

The U.S. Dollar Index (DXY) rises to 98.38 after the jobs data. The 10-year US Treasury yield fell to 4.176%, easing concerns over rising federal debt.

As The Coin Republic reported, the 30-year US Treasury yield hit 5% today amid concerns surrounding rising fiscal debt. Gold price hit a new ATH above $3600, with JPMorgan expecting a move to $5,000.

Bitcoin Price Consolidates Despite Fed Rate Cut Bets

BTC price rose to $113K after the US jobs data came in lower than expected, suggesting a potential Fed rate cut ahead. In other words, this has boosted the confidence of traders that the Fed may turn dovish with their policy rate plans, given the cooling labor market.

However, the momentum was short-lived, as BTC soon retreated from $113k level. At the time of writing, BTC price was trading at $110,800, with a 24-hour low and high of $110,233 and $113,357, respectively.

Furthermore, the trading volume has decreased by 12% in the last 24 hours, indicating a decline in interest among traders after the Nonfarm payrolls data and crypto options expiry on Friday.

Derivatives market data on Coinglass signaled mixed sentiment. At the time of writing, the total BTC futures open interest fell nearly 1% to $80 billion in the last 24 hours.

This indicates that the optimism over the Fed rate cut was short-lived. Rather, the market is focusing on the broader market trends and other factors to gauge the potential market risks.

BTC futures OI on CME and Binance dropped around 0.5% and 1% in the last 4 hours, respectively.

Analysts revealed that traders closing their short positions resulted in the bounce so far. The long positions have started to get liquidated.

Popular analyst Scott Melker, aka The Wolf of All Streets, pointed out that BTC is making another lower high. Having said that, he noted that the price risks falling below $108K if the bears continue to dominate.