Bitcoin Struggles Below $112K Amid Fed Rate Cut Speculation and Jobs Report Shock

<a href="https://inrusdinr.in/btc-usd/">Bitcoin</a> Stays Below $112K After Tough Jobs Report and Fed Cut Bets. What Next?Markets

What to know:

The U.S. jobs report revealed only 22,000 job additions in August, far below expectations, increasing the likelihood of a Fed rate cut.
Still, BTC‘s price remains below $112K, suggesting a bearish technical outlook.
Despite impending Fed rate cuts, the downside in Treasury yields appears limited.

NFP shock

In August, job seekers faced a challenging job market as the nonfarm payrolls only added 22,000 new jobs – far less than the expected 75,000 by Dow Jones. Moreover, the report adjusted the combined job growth for June and July downward by 21,000 jobs, with June’s revision showing a total loss of 13,000 jobs.

In nine different areas such as manufacturing, construction, retail trade, and professional jobs, there was a decrease in employment, but the health sector and the leisure and hospitality industries saw an increase.

In simpler terms, the Kobessi Letter found the latest jobs report to be utterly bewildering. The newsletter service suggested that the significant reductions in earlier reports indicated a faulty system and hinted at the labor market approaching a state of recession.

Based on the latest employment data, the expectation for a Federal Reserve interest rate reduction at their September 17th meeting reached 100%, and the chance of a 0.5% decrease rose to 12%. Additionally, the possibility of further cuts in November and December also increased, leading Treasury yields to decline.

Anticipated changes to previous employment statistics, due to be announced by the Bureau of Labor Statistics (BLS) on Tuesday, are expected to strengthen the argument for interest rate reductions. These revisions could indicate slower job growth earlier in the year, with some analysts suggesting up to 1 million jobs might be revised downward. This is according to a market update provided by Marc Chandler, Managing Director and Chief Market Strategist at Bannockburn Global Forex.

BTC’s double top is intact; volatility in Treasury yields may rise

Initially, Bitcoin experienced a surge due to optimism about a potential Federal Reserve interest rate reduction and lower yields, peaking at approximately $113,300. However, this upward trend proved short-lived as prices subsequently dropped below $111,982 – the level representing the double top neckline in technical analysis terms.

If we can’t recover that level, it emphasizes the breakdown at the end of August, confirming the negative pattern. This means the possibility of falling prices should be considered carefully. When prices dip below the Ichimoku cloud, this strengthens the bearish prediction, as Brent Donnelly, president of Spectra Markets, pointed out in a market update.

Support is found approximately at $101,700, aligning with the 200-day simple moving average (SMA). The recent double top collapse in bitcoin resembles the one from February this year, triggering a substantial decline over several weeks, driving prices down towards $75,000.

A double top is a bearish chart pattern that signals a potential reversal after an asset has been increasing in value. It forms when the price reaches a high point (first peak), then falls to a level of support known as the neckline. The price rises again, but doesn’t manage to surpass the initial high, creating a second peak at approximately the same level. The pattern is considered complete when the price drops below the neckline, indicating that the previous upward trend may be slowing down and a downtrend could be starting.

Treasury yields may turn volatile

The recent double top breakdown suggests a pessimistic technological forecast, and this view could be strengthened by an increase in volatility in Treasury yields. Such volatility is typically associated with financial tightening.

The turbulence might increase over the next few days, as the anticipated Federal Reserve interest rate reductions may initially cause the 10-year yield to drop, which would be a favorable situation for Bitcoin and risky assets. However, it’s worth noting that any potential decline could be brief, possibly even reversing itself swiftly, similar to what transpired in late 2024.

During the last quarter of 2024, from September to December, an unexpected occurrence took place as the 10-year yield increased, despite the Federal Reserve reducing interest rates during this period. This rise in yield contrasted with the decrease that had been seen prior to September. The lowest point for the 10-year yield was reached at 3.6% around mid-September 2024, and it continued to climb, reaching 4.80% by mid-January of the same year.

Despite a noticeably weaker labor market compared to last year, inflation has risen, and fiscal spending remains robust. Consequently, there’s a strong likelihood that interest rates could increase after the September reduction.

The reason behind the increase in 10-year yield from September to December 2024 can be open to various interpretations, but it’s important to note that there was an underlying strength in macroeconomic conditions, persistent inflation, and many discussions about potential future fiscal spending being a medium-term risk. This time, however, economic concerns are more pronounced. Balancing this out, though, are ongoing fiscal uncertainties, and a significantly different inflation scenario. This is according to analysts at ING in their communication with clients.

August CPI data due next week

In September when the Federal Reserve reduced interest rates, the American consumer price index was significantly less than 3%. Since then, it has gradually increased to reach 3%. Moreover, the upcoming CPI data for August is expected to offer additional insights suggesting that inflation may be persisting.

As per Wells Fargo’s predictions, it is expected that the fundamental Consumer Price Index (CPI) could increase by 0.3%. This would maintain the annual rate at 3.1%. On a monthly basis, the overall CPI is forecasted to surge by 0.3%, while the yearly growth rate is anticipated to stand at 2.9%.

2025-09-06 21:35