Strong U.S. job growth in June has diminished expectations for an imminent rate cut by the Federal Reserve (Fed), causing concern among investors regarding the continuation of the Bitcoin rally . According to the U.S. Bureau of Labor Statistics, the U.S. economy added 147,000 jobs in June, surpassing analyst expectations . The unemployment rate also fell to 4.1% .
This strong economic data has led to a revision of market expectations regarding the Fed's monetary policy. The odds of a rate cut in July have fallen dramatically, as the Fed is likely to wait for a weakening of the labor market before making a cut . The immediate market reaction was an increase in the probability of the Fed holding rates steady at its upcoming July meeting, from 75% to 95% . This shift underscores a pivot towards a 'higher for longer' interest rate environment, creating headwinds for assets like Bitcoin that thrive on liquidity and lower borrowing costs .
Bitcoin's price action was notably affected by the jobs report. Just hours before the report, Bitcoin was demonstrating bullish momentum, successfully breaking the $110,000 barrier for the first time in approximately a month . However, the positive jobs data acted as a powerful catalyst for a reversal. In the minutes following the release, the price of Bitcoin dipped sharply, falling below $109,000 before finding some stability .
Analysts point out that the strong jobs report bolsters Fed Chair Jerome Powell's case for taking a "wait-and-see" approach before cutting rates . Powell has consistently argued for patience, citing a strong economy, and this report provides substantial evidence to support his position .
Furthermore, the increase in US job positions has implications for the housing market. For homebuyers, it means mortgage rates are unlikely to fall much in the near future, which comes as unwelcome news at a time when affordability concerns remain paramount .
Overall, the U.S. jobs report has created a complex environment for Bitcoin and other high-risk investments. While the strong labor market is positive for the economy, it reduces the chances of rate cuts by the Fed, putting pressure on Bitcoin's price . Traders and investors will be closely monitoring economic data and Fed decisions to determine Bitcoin's future trajectory .