Better-than-expected U.S. labor data raises concerns about inflation: a (good) bad news for Bitcoin
Bitcoin: U.S. Labor Data Slows BTC Recovery
Declining Unemployment in the U.S.: Why It Matters for BTC
In recent hours, the Bureau of Labor Statistics (BLS) has released new U.S. labor market data, which turned out to be more positive than economists expected.
We are talking about 256,000 new jobs in December, significantly more than the anticipated 160,000, as seen in the previous month. Consequently, concerns about inflation are rising, which in turn plays a crucial role in the price of Bitcoin and other “risky” assets.
At stake, as we know, are interest rates and the Fed’s monetary policy, whose cuts could be compromised by a more robust-than-expected economy. Good news in general, then, but “bad” for BTC, which would certainly benefit from rate easing.
As reported by the BLS, the unemployment rate dropped from 4.2% to 4.1%, with collective wage growth potentially contributing to inflationary pressures.
“Employment growth means further inflationary pressures and, therefore, a lower likelihood of rate cuts,” said economist Tom Dunleavy on the matter.
And if the Fed had already stated that the pace of rate cuts in 2025 would be “slower,” these data might weigh even more on the U.S. central bank’s strategy.
BTC Returns to “Following” the Stock Market
At the same time, higher bond yields are putting even more pressure on “risky” assets like crypto. For instance, the 10-year Treasury yield rose to 4.78% (the highest since October 2023).
Traders are already showing signs of skepticism regarding rate cuts in the coming months, with CME FedWatch indicating that the probabilities for such cuts have shrunk to 2.7%.
After an initial dip below $93k, BTC seems to be resisting significant corrections, managing to stay at least around $94k, though volatility appears to be increasing.
Likewise, the correlation between the leading cryptocurrency and the stock market is growing, showing how, in the new year, the narrative surrounding the pro-crypto Trump administration seems to have lost momentum.
What do you think?
By Gue 22