Bitcoin dipped below $80,000 after strong U.S. job growth raised expectations for a Federal Reserve rate hike this month.
Summary
- The U.S. economy added 162,000 jobs in August, far exceeding the anticipated 53,000, while the unemployment rate remained steady at 4.1%.
- Bitcoin dropped below $80,000 after hitting a four-month high of $82,240, as futures indicated an increased likelihood of a September rate hike.
- The Dow Jones fell by 226 points, and gold prices also declined, following President Trump's call for lower interest rates shortly after the jobs report.
In August, the U.S. job market saw a significant boost with the addition of 162,000 jobs, nearly three times higher than the 53,000 jobs forecasted by economists, according to the Bureau of Labor Statistics. The unemployment rate held steady at 4.1%, in line with expectations, and previous months' job figures were revised upwards.
This strong jobs report spurred speculation about a potential interest rate hike by the Federal Reserve, leading to a 226-point drop in the Dow Jones Industrial Average, while the S&P 500 fell by 0.2% and the Nasdaq Composite saw a slight increase of 0.1%.
Traders are now pricing in a 58% chance of a rate increase at the Fed's upcoming meeting on September 15-16, up from 49.4% the previous day, as indicated by the CME FedWatch tool. Treasury yields rose, with the two-year note reaching its highest level since January 2025.
President Trump commented on Truth Social about the positive jobs report, urging the Fed to lower interest rates and warning of trade issues with countries that have a surplus against the U.S.
Gold prices fell to $4,380 per ounce, potentially marking a second consecutive weekly loss. Similarly, Bitcoin, which peaked at $82,240 earlier in the day, retraced over 2% to around $79,300 following the jobs report. This initial surge was partly fueled by Fed Governor Christopher Waller's comments suggesting a preference for maintaining current rates.
Higher interest rates generally boost the appeal of risk-free assets, making it necessary for stocks and cryptocurrencies to offer higher returns to remain attractive. Additionally, rising rates typically strengthen the dollar, adversely affecting dollar-denominated assets such as Bitcoin and gold, which explains the price drop following the strong jobs report.
This situation contrasts with the aftermath of July’s weaker jobs report, which reduced rate hike expectations and allowed cryptocurrency prices to rise. A significant increase in job numbers undermines the case for keeping rates unchanged, as suggested by Waller just a day earlier.
Bitcoin began September trading around $77,500, a month often referred to as Red September due to the cryptocurrency's historical tendency to close lower in eight of the last thirteen Septembers. The recent price movement aligns with this trend, even after a recent short squeeze eliminated over $415 million in bearish positions.
Current Crypto Market Overview
The overall sentiment in the cryptocurrency market has softened but remains bullish. The CoinMarketCap Fear and Greed Index is at 75, indicating "greed," while the total market capitalization hovered around $2.67 trillion with a slight daily increase of 0.11%. However, bullish sentiment has waned compared to last week’s extreme levels.
Spot Bitcoin ETFs reported net inflows of $730.8 million, continuing a positive trend that began with an optimistic outlook on potential rate pauses. The Altcoin Season Index remained at 38, indicating a preference for Bitcoin over other cryptocurrencies.
The Federal Reserve's decision on interest rates is anticipated on September 15-16, marking the first hike under consideration since the tightening cycle that ended in July 2023. The next jobs report, covering September payrolls, is set for release on October 2.
