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Bitcoin Holds Steady Amidst Mixed US Jobs Report

The Bitcoin (BTC) price is holding within recent ranges to the north of the $29,000 level in the wake of the latest mixed US jobs report for July. The report revealed that the US economy added 187,000 jobs in July, below the expected gain of 200,000. Moreover, JuneÔÇÖs job gain of 209,000 was revised lower to a job gain of 185,000. However, a separate survey of households revealed that the unemployment rate had unexpectedly declined to 3.5% from 3.6% in June. Average hourly earnings growth was also stronger than expected, rising 0.4% MoM in July against expectations for an increase of 0.3%, pushing the YoY rate up to 4.4%.

Something For Everyone

The lack of reaction in the bitcoin price and broader financial markets to the report was attributed to the fact that there was ÔÇ£something for everyoneÔÇØ in the data. On the one hand, the rate of job gains in the US is clearly trending lower, with the headline July NFP reading its lowest since early 2021. That is a sign that heat is coming out of the jobs markets, something the Fed wants to see, as a hot jobs market makes tackling still too-high US inflation more difficult (or impossible, some would say). But then again, still super low (by historic comparison) unemployment rate and wage growth that remains well above the FedÔÇÖs 2.0% inflation target show that the labor market remains too hot for the FedÔÇÖs liking.

Fed Tightening Cycle Likely Done, Markets Think

Investors seem to have taken the view that the latest jobs report doesnÔÇÖt change the narrative much regarding expectations for Fed tightening. According to the CMEÔÇÖs Fed Watch Tool, US interest rate futures pricing implies an 86% chance that the central bank leaves rates unchanged at the next meeting in September, a tad higher than prior to the data release. Markets then assign a roughly 75% chance that rates are left at their current or lower levels for the remainder of the year, again, not much changed versus prior to the data release. US interest rate futures currently assign a roughly 60% chance that the Fed will have begun cutting interest rates by next March. In sum, the market’s base case appears to be that the FedÔÇÖs tightening cycle is now done before gradual cuts begin in 2024. Commentary from Fed policymakers themselves lends support to this thesis. While Chairman Jerome Powell will continue to try to leave the door open to more rate hikes, in order to ensure financial conditions donÔÇÖt ease prematurely, Fed Bank of Atlanta President Raphael Bostic was on the wires on Friday saying he doesnÔÇÖt see the need for any more hikes to ease inflation, a view likely shared by plenty of other Fed policymakers.

What This Means for Bitcoin (BTC)

So, with the US labor market gradually cooling off and inflation steadily moving in the right direction, it appears that the Fed is pretty done with tightening. Given the fact that 2022ÔÇÖs aggressive tightening was a key driver of the bitcoin bear market last year, an end to the tightening cycle should be taken as a positive for the bitcoin price. Still, the end to a tightening cycle doesnÔÇÖt mean that a sudden easing of financial conditions and a sudden jump in liquidity is on the horizon.

The AI legalese decoder can help in this situation by providing analysis and insights on the potential impact of the Fed’s tightening cycle on the Bitcoin market. By using advanced algorithms and machine learning techniques, the AI legalese decoder can analyze the complex legal and financial language used in reports like the US jobs report, and provide a comprehensive understanding of the implications for Bitcoin and other cryptocurrencies. This can help investors and traders make informed decisions and navigate the market more effectively.

With the US economy outperforming expectations in the first half of 2022, the jobs market still also consistent with a strong economy and inflation still well above the FedÔÇÖs 2.0% target, the case for substantial financial easing right now is weak. Just as macro isnÔÇÖt a big headwind to bitcoin right now, it isnÔÇÖt a massive tailwind either, and probably wonÔÇÖt become one until we are having more serious discussions about a US recession and rate cuts. For now, updates on more crypto-specific themes such as institutional adoption (spot bitcoin ETF applications and corporate whales like Tether and MicroStrategy) and regulation (the SECÔÇÖs regulation by enforcement approach and global efforts to pass crypto regulation) are likely to have a bigger impact on the price. Technicals will also remain important, with technicians currently questioning whether bitcoin can hold to the north of its 2023 uptrend, which it appears to be coming close to retesting once again.

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