Bitcoin Price Shakes Off Fed Jitter Following Hot Labor Market Reading.

price bitcoin Stronger-than-expected U.S. employment data rebounded on Friday, which could potentially force the Federal Reserve to delay cutting interest rates.

Ministry of Labor said The unemployment rate rose slightly to 4% in May, but job growth also accelerated amid the most restrictive interest rates in more than 20 years. Economists had predicted that employers would add 180,000 nonfarm payroll jobs, but the report found that the U.S. economy added 272,000 jobs last month.

Shortly after the report was released, Bitcoin Dropped to $70,700 It starts at around $71,800, according to CoinGecko data. However, at the time of writing, the price of the asset has risen slightly to $71,050, down a slight 0.4% over the last 24 hours.

Federal Reserve Chairman Jerome Powell said Despite the strength of the labor market earlier this month, inflation has fallen significantly from multi-decade highs in 2022. Previously, policymakers believed some easing may be needed to bring inflation down to the target of 2% and ease upward wage pressures due to falling demand for jobs.

“May’s job gains were noticeably stronger,” said Zach Pandl, Grayscale’s director of research. decryption “The likelihood of further Federal Reserve interest rate cuts this year is likely to increase,” the statement added.

Nonetheless, Pandl believes the Fed will cut interest rates in the medium term as it eases monetary policy. bank of canada and European Central Bank For the past week. According to CME Group FedWatch Tool, The outlook for the Federal Reserve to keep interest rates stable until the end of the year increased from 5.5% to 11.3% after the report was released.

Nonetheless, markets see a 50% chance that the Fed will cut interest rates in September, which would likely accelerate economic growth by lowering borrowing costs.

Higher interest rates generally weigh on the value of so-called risk assets, including stocks and cryptocurrencies, because the payouts for holding cash or U.S. Treasury bonds are relatively more attractive. Despite the implications of the report or the possibility of a delay in the Fed’s rate cut, Pandl believes “Bitcoin will retest its all-time highs in the coming months.”

Meanwhile, James Butterfill, head of research at CoinShares, said on Twitter (aka X) that Bitcoin has become “very sensitive to interest rate expectations.” In 2022, macroeconomic data and related jitters could cause Bitcoin to fluctuate by around 10% in either direction. given day.

Changes in expectations of interest rate cut in April distorted As geopolitical tensions in the Middle East rise, the price of Bitcoin also rises. Nevertheless, the Federal Reserve is scheduled to announce its next actions at its June policy meeting next week.

Editor: Andrew Hayward