Bitcoin faltered on Friday, slipping below the key resistance level of $116,000 despite the release of disappointing U.S. jobs data that would typically bolster risk assets. The unexpected market reaction highlights the current uncertainty surrounding digital assets as investors appear to weigh bearish internal signals over favorable macroeconomic developments.
The U.S. jobs report for July showed a significant slowdown, with the economy adding just 73,000 jobs, well below economists' forecasts of 115,000. Furthermore, figures for previous months were revised down significantly, with a combined 258,000 fewer jobs added in May and June than previously reported. The unemployment rate ticked up slightly to 4.2%. This weak data prompted an immediate repricing of market expectations for the Federal Reserve's monetary policy.
As a result of the soft jobs numbers, traders raised expectations for a September interest rate cut to around 80%. This shift was fueled by the belief that a cooling labor market could push the Fed to adopt a more dovish stance to stimulate economic growth. The likelihood of a rate cut is generally seen as positive for assets like Bitcoin, as it can weaken the dollar and make alternative investments more attractive. However, Bitcoin's reaction defied this logic.
Instead of rallying, Bitcoin retreated, falling below $115,000 and facing stiff resistance near the $116,000 mark. The decline coincided with a broader risk-off sentiment in the markets, partly triggered by the implementation of new U.S. tariffs affecting dozens of countries. This suggests that macroeconomic anxieties and crypto-native factors, such as liquidations, may have overshadowed the potentially bullish news from Fed expectations. Some analyses have pointed out that Bitcoin can be "orthogonal to macroeconomic news," unlike traditional assets.
The contradiction between soaring rate cut probabilities and Bitcoin's price decline underscores the market's complexity. While a more accommodative Fed is historically favorable, the current volatility, coupled with geopolitical trade factors, has created an unpredictable environment. Investors are now closely watching whether Bitcoin can reclaim key support levels or if it will continue to falter under the weight of broader economic uncertainty.