Fed rate cut probability in December rises: Bitcoin Reacts to U.S. Jobs Data

The probability of a U.S. interest rate cut in December has increased following the latest jobs data, prompting notable reactions in the financial markets, Bitcoin has responded dynamically, reflecting the cryptocurrency's sensitivity to macroeconomic trends.

BTC-USD price chart reflected a sharp upward trend

Bitcoin reacts to US jobs data: the U.S. Bureau of Labor Statistics (BLS) released the November Employment Situation report at 8:30 a.m. ET on Friday.

The report indicated an increase in total nonfarm payroll employment by 227,000, surpassing expectations, while the unemployment rate held steady at 4.2 percent. Significant job gains were noted in sectors such as healthcare, leisure and hospitality, government, and social assistance, although retail trade experienced notable losses.

Additional details revealed a stable labor force participation rate of 62.5 percent and a slight rise in the average workweek to 34.3 hours. Average hourly earnings increased by 0.4 percent to $35.61, reflecting a year-over-year growth of 4 percent. These figures suggest a robust labor market, albeit with ongoing wage-driven inflationary pressures.

The release of the Employment Situation report triggered immediate reactions in financial markets, particularly affecting Bitcoin's price. At 8:30 a.m. ET, the BTC-USD price chart displayed a significant upward movement, as illustrated by TradingView data.

Before the announcement, Bitcoin appeared to be consolidating around the $97,900 range. However, by 9:18 a.m. ET, it had surged to approximately $98,749, representing a 0.86 percent increase in the hour following the report, though it remained 4 percent lower on a 24-hour basis. The timing of this surge strongly correlates with the release of the employment data, suggesting that traders may have anticipated or reacted to implications for Federal Reserve policy. This aligns with Bitcoin’s behavior as a hedge or speculative asset sensitive to macroeconomic data.

US interest rate cut in December rises to 74.5% probability

Bitcoin (BTC) is currently trading at $98,702, with expectations of US interest rate cut being perceived as bullish for the cryptocurrency. Historically, lower borrowing cost have encouraged investors to explore riskier assets, including cryptocurrencies.

The CME FedWatch tool monitors the likelihood of interest rate adjustments based on 30-day futures pricing data. The increased probability of a rate cut follows comments from Federal Reserve Governor Christopher Waller, who indicated in a December 2 speech at a monetary policy conference in Washington, D.C., that he is leaning toward supporting a cut.

However, Waller cautioned that any decision would hinge on incoming data and whether it surprises positively, potentially altering his inflation forecast.

On December 2, New York Fed Bank President John Williams addressed the Queens Chamber of Commerce, stating that he anticipates interest rates will decrease "over time," but he did not specify whether he would support a Fed rate cut at the upcoming meeting.

Federal Reserve Chair Jerome Powell remarked about interest rate cut last month that there are "no signals indicating we need to rush to lower rates." However, he is expected to share new insights on potential rate cuts during a public discussion in New York on December 4.

In the meantime, Bitcoin's price has more than doubled this year, fueled by renewed market optimism in the U.S., significantly influenced by the election of Donald Trump, who has pledged to reform crypto regulations.

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