Bitcoin prices rose on Friday after explosive jobs numbers allayed fears of an impending economic slowdown in the US, earlier rising more than 3% to a daily high of more than $62,300. Ta.
The Bureau of Labor Statistics reported Friday that employers added 254,000 jobs in September, well above the 140,000 job gains expected by economists. Meanwhile, the employment data for July and August was revised upwards, highlighting a positive picture for the working environment, which was thought to have deteriorated as the US Federal Reserve (Fed) began its easing campaign.
September data on Friday showed U.S. employers added the most jobs in a single month since March’s 310,000 increase. At the same time, the unemployment rate fell from 4.2% to 4.1%, in line with June’s unemployment rate but slightly lower than economists expected.
Although the price of Bitcoin is now slightly lower at just over $62,000, Bitcoin has started to rise after a rough sell-off in early October, and the price trend continues to be positive the previous day.
21Shares research analyst Leena Eldeeb told Decrypt in a statement that Friday’s jobs report supports “risk assets” such as stocks and cryptocurrencies. To get the Federal Reserve’s easing campaign back on track, he pointed to lower borrowing costs as a boon for Bitcoin prices.
“The long tail of Bitcoin and crypto assets is sensitive to labor market data, as labor market data influences the Fed’s decision to cut interest rates, which will have a positive impact on Bitcoin by lowering borrowing costs,” he said. “I will give you that,” he said. “We therefore expect flows to start to recover following the heightened geopolitical tensions that rocked markets last week.”
In fact, Bitcoin is trading 6% lower this week as the missile launch from Iran towards Israel has spooked markets.
According to Bloomberg ETF analysts, BlackRock reported that Bitcoin briefly fell below $60,000 on Thursday after the event caused a pause in the so-called Uptober, a period of historic strength in Bitcoin prices. This was the fourth outflow of funds from the Spot Bitcoin ETF on record. James Seifert. And overall, Bitcoin ETFs recorded three consecutive days of outflows since the beginning of the month.
As inflation trends toward the Fed’s 2% target, policymakers are increasingly paying attention to labor market conditions. The fear is that interest rates, recently cut from 20-year highs, could prove too restrictive in hindsight and push the economy into recession.
Federal Reserve Chairman Jerome Powell poured cold water on the prospect of a major rate cut earlier this week. He said the U.S. central bank’s “base case” is for the Fed to cut rates by 25 basis points two more times before the end of the year, after cutting its benchmark rate by 50 basis points last month.
Expectations for a 50 basis point (bp) rate cut have virtually disappeared in the face of strong labor data, according to CME Group’s FedWatch tool. Traders predicted a 5% chance the Fed would request such drastic action, down from 32% a day earlier.
Friday’s labor market indicators were very strong and could lead to near-term inflation concerns, Zach Pandle, managing director of research at Grayscale Investments, told Decrypt in a statement. However, he said strong economic growth could support Bitcoin’s price, especially as talk of government spending increases after the November presidential election.
“Debates about Fed rate cuts and widening government deficits continue in tandem with strong economic growth, which should be a net positive for investors’ risk appetite,” he said. “Grayscale Research expects Bitcoin to benefit in this risk-positive environment.”
Edited by Andrew Hayward
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