Bitcoin News Today: Investors Reassess as Job Market Shifts Crank Up Fed Easing Bets

U.S. jobless claims surged to 237,000 in the latest week, marking the highest level in months and intensifying expectations for a Federal Reserve rate cut as early as September. The elevated claims, combined with weaker labor market indicators such as declining job openings and a rising unemployment rate, have shifted the economic narrative toward a more accommodative policy outlook. These developments have sparked renewed speculation that lower interest rates could catalyze a rally in Bitcoin and other cryptocurrencies.

Shaun Osborne, chief currency strategist at Scotiabank, highlighted the significance of the labor data, noting that for the first time since 2021, the number of unemployed individuals in the U.S. has exceeded available jobs. This structural shift in the labor market has prompted investors to reassess their positioning, with bond yields reacting accordingly. The yield on 30-year U.S. Treasuries declined by 6 basis points to 4.90%, reflecting a reversal in the bond market’s earlier bearish trajectory. Meanwhile, global bond markets, including the UK’s gilts, also showed signs of stabilizing in response to the weaker employment data.

The potential for Fed easing has led to bullish forecasts from market participants in the cryptocurrency sector. Kris Marszalek, CEO of Crypto.com, predicted that a rate cut could propel crypto assets higher in the coming months, drawing on historical precedent when a 2024 cut from 5.5% to 4.5% led to a 57% rise in crypto prices over four months. Investors currently assign a 91.7% probability to the Fed easing monetary policy, a figure that climbed following comments from Fed Chair Jerome Powell at the Jackson Hole symposium.

However, not all analysts share a uniformly positive outlook. Doctor Profit, a crypto trader, observed that bond yields have risen by 5% ahead of the next rate cut, indicating investor skepticism about the effectiveness of Fed intervention. He argued that the market is not buying into the idea of a Fed-driven recovery, with investors demanding higher compensation for risk. This divergence in sentiment reflects broader concerns about long-term borrowing costs, which continue to rise despite short-term rate reductions.

In contrast, some experts argue that rising yields may not necessarily signal market pessimism but rather a recalibration of long-term risk premiums. Eazi, a web3 analyst, suggested that the market is forcing a return to “real” capital costs after years of artificially suppressed yields. This perspective implies that the current environment could ultimately pave the way for healthier valuations in the crypto and broader financial markets.

As the Fed’s policy direction remains under scrutiny, the cryptocurrency market continues to react to shifting expectations. Bitcoin recently traded near $111,500, having risen 1.6% in the past 24 hours. With a potential rate cut looming, the market is closely watching for further economic signals that could confirm or challenge the bullish narrative.

Source:

[1] Markets bet on a bitcoin rally as the Fed eases policy (https://forklog.com/en/markets-bet-on-a-bitcoin-rally-as-the-fed-eases-policy/)

[2] US Jobs Data and BTC USD Rally Put Fed Rate Cuts Into Focus (https://99bitcoins.com/news/bitcoin-btc/us-jobs-data-and-btc-usd-and-bond-market-rally-put-fed-rate-cuts-in-focus/)

[3] This Wall Street heavyweight predicts interest rates could go even lower than markets think (https://www.marketwatch.com/story/this-wall-st-heavyweight-predicts-interest-rates-could-go-even-lower-than-markets-think-879a4748)