Bitcoin Bulls Dance as US Jobs Data Sparks Market Rethink on Fed Rate Cuts

Bitcoin Surges to $40,000 as US Jobs Data Alters Market Sentiment

Bitcoin (BTC) reached $40,000 on December 8th following the release of United States employment data, which impacted market expectations regarding interest rate cuts. The cryptocurrency held its ground as risk assets reacted to the latest US inflation cues.

The US Bureau of Labor Statistics reported that nonfarm payrolls exceeded expectations at 199,000, compared to the forecasted 190,000. Additionally, the unemployment rate was lower than anticipated at 3.7% instead of 3.9%. These figures indicated that the full impact of Federal Reserve monetary tightening had yet to materialize. While previous data had already reflected declining inflation, the labor figures made markets nervous.

The latest jobs report prompted a shift in interest rate futures, with rate cuts now predicted to begin in May 2024 instead of March 2024. Prior to the report, there was a 60% chance of rate cuts starting in March 2024. The odds of rate cuts beginning in January 2024 also decreased from 16% to 6%.

Data from CME Group’s FedWatch Tool showed that the probability of any rate change freeze continuing at the next Fed meeting was practically zero.

The release of the employment data caused significant volatility in the US dollar index (DXY), briefly driving it to its highest levels since November 20th before it retraced to trade at 103.8 at the time of writing.

Despite the decreased belief in lower interest rates occurring sooner, Bitcoin managed to avoid a significant decline. The largest cryptocurrency remained within a multi-day trading range as traders sought signs of trend continuation.

Analyst Matthew Hyland noted that Bitcoin was still consolidating in an uptrend and maintaining its strength after the recent price movement. He identified clear support around the $43,000 level.

Altcoins, such as Ether (ETH) and Solana (SOL), gained attention compared to Bitcoin. These cryptocurrencies took the lead overnight amid renewed anticipation of an “alt season” returning. Analyst MichaĆ«l van de Poppe suggested that Ethereum’s momentum was increasing, and the bottom for ETH/BTC was approaching or already reached.

This article does not provide investment advice or recommendations. Investors should conduct their own research before making any decisions.

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