Bitcoin’s price has seen a significant uptick, driven by new US job data that suggests a slowing labor market, fueling investor optimism about a potential Federal Reserve rate cut.
The latest report from the US Labor Department revealed that nonfarm payrolls increased by 143,000 in January, a noticeable drop from December’s 256,000. This figure fell short of Wall Street’s forecast of 169,000. Additionally, the unemployment rate decreased from 4.1% to 4%, indicating a slight improvement in the overall job market.
The data has led to rising expectations of a rate cut by the Federal Reserve, as a cooling labor market may prompt the central bank to reduce interest rates. Lower rates typically make riskier assets like Bitcoin more attractive to investors.
Following the release of the job data, Bitcoin’s price jumped to $98,497, marking a significant rebound from the 24-hour low of $95,707.35. As of the time of this report, Bitcoin was trading at $97,949.
Futures Market Reacts, But Rate Cut Likelihood Remains Low
Bitcoin Futures Open Interest surged, signaling heightened investor interest. Some analysts are optimistic that this could trigger a bullish trend in the cryptocurrency market.
In response to the job data, the broader financial market saw movement as well. The 10-year U.S. Treasury Bond Yield rose 0.77% to 4.471, and the U.S. Dollar Index gained 0.23%, reaching $107.790.
However, despite the optimism, the CME FedWatch Tool currently shows a mere 10.5% chance of a 25-basis point rate cut at the next Federal Open Market Committee (FOMC) meeting scheduled for March. Federal Reserve Chairman Jerome Powell had previously stated on January 30 that the central bank would closely monitor inflation and economic conditions before adjusting policy. “We need to see more evidence that inflation is on a sustainable path to 2% before considering rate cuts,” Powell remarked in his last FOMC meeting.
Crypto Community Remains Optimistic
Despite the uncertainty surrounding an immediate rate cut, many in the cryptocurrency community remain bullish. Market analyst Mister Crypto took to the social media platform X (formerly Twitter) to call the recent job data “BULLISH FOR CRYPTO,” suggesting that the weakening job market could increase the likelihood of a rate cut, making Bitcoin a more attractive investment.
Nevertheless, experts caution that short-term volatility could still impact the crypto market. With large Bitcoin (BTC) and Ethereum (ETH) options contracts set to expire, traders are bracing for potential price swings in the near future.
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