Bitcoin drops on jobs report after strong U.S. employment data. The asset gave up its sharp rally on Friday.
BTC pushed to a new intraday high above $82,000. Heavy selling then pushed it back below $80,000.
Why Bitcoin drops on jobs report
The sell-off came after a stronger-than-expected jobs report. Nonfarm payrolls showed 162,000 jobs added. Wall Street expected only 55,000. The unemployment rate stayed flat at 4.1%. Average hourly earnings rose 0.3% monthly and 3.1% annually.
The report also had upward revisions of 55,000 jobs. These revisions covered June and July. This further supported a robust labor market narrative.
Bitcoin first surged to an intraday high of $82,262.21. It then lost ground following the report. BTC dropped from approximately $81,600 to nearly $79,800. This happened in just a few minutes. Over $2,400 was wiped out. The crucial $80,000 threshold was lost.
At press time, BTC stood at $76,334. It was still up by 1.64% on the day. Nevertheless, it lost steam compared to the 4% rally earlier.
Fed rate expectations weigh on crypto markets
The robust job data lowered hopes for Fed stimulus cuts. A strong labor market gives policymakers room. They can keep borrowing costs higher when inflation remains elevated. This puts more pressure on riskier assets like cryptocurrencies.
Prediction markets now price in a September rate hike. The odds are 53% for a 25-basis point increase. This is up from last week’s 51%.
When interest rates rise, fixed-income securities become more attractive. Cryptocurrencies like Bitcoin become less attractive as a result.
Investors now turn to the next set of U.S. CPI and PPI inflation data. The Fed’s policy decision later this month is also key. Bitcoin is up from previous week lows. Nevertheless, it is likely to remain volatile as markets grapple with the new rate outlook.
