Strong US Jobs Report Pulls Bitcoin Below $80,000 as Rate Cut Odds Shift
Bitcoin drops on surprise US jobs data
Bitcoin fell below $80,000 after the United States reported a stronger-than-expected jobs report for August. The surge in hiring pressured traders to reconsider the likelihood of an immediate interest rate cut by the Federal Reserve.
The US economy added 162,000 nonfarm payroll jobs in August. This figure nearly tripled the consensus estimate of 56,000 jobs reported by economists.
Following the announcement, Bitcoin sold off from $81,300 to a local low of $78,600. It later recovered to trade around $79,500.
What the labor data shows
- The US added 162,000 jobs in August, far exceeding the predicted 56,000.
- Bitcoin dropped to $78,600 before rebounding to $79,500.
- A rival Bitcoin fork using the Blake2b algorithm saw its first trading activity on Neoxa exchange at $350.
Fed rate outlook shifts
The strong labor market data has changed how traders view future Federal Reserve actions. With the next Federal Open Market Committee (FOMC) meeting set for Sept. 15-16, uncertainty remains high due to a lack of clear forward guidance from Chair Kevin Warsh.
Before the jobs report, Fed Governor Christopher Waller had indicated a preference for pausing interest rates until more inflation data arrived. This comment initially moved Polymarket probabilities to a 60% chance of a rate pause and a 40% chance of a 25 basis-point rate hike.
The Friday labor data reversed that momentum, returning implied probabilities to a near 50/50 split between a rate pause and a rate hike.
Political reaction
President Donald Trump criticized the Federal Reserve's stance on social media platform Truth Social. He stated that the Fed Board must "get smart" and "be patriots." He argued that high interest rates place the US at an unfair disadvantage compared to other economies.
While Trump had frequently criticized former Chair Jerome Powell for not cutting rates, he had held back from making similar public statements toward Warsh until this week.
New Bitcoin fork begins trading
In related market news, a rival version of Bitcoin began trading for the first time. The fork follows a disagreement over the BIP-110 soft fork, which activated on Aug. 7.
After the original Bitcoin network failed to fully adopt the new rules due to low miner support, a group led by LukeDashjr initiated a hard fork on Aug. 30. This new chain uses the Blake2b algorithm instead of Bitcoin's traditional SHA-256.
The goal is to allow for more decentralized mining through DATUM gateway technology. Every address that held Bitcoin before Aug. 7 received an equivalent amount on the new chain. Currently, Neoxa is the only exchange listing the new asset, known as BTCB2, which is trading against USDC at $350.
Why this matters
The drop in Bitcoin highlights how closely crypto markets are tied to traditional US economic indicators. A robust jobs report often reduces the urgency for central banks to lower interest rates, which can dampen sentiment for risk assets like Bitcoin.
Sources
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