Bitcoin (BTC) Falls as U.S. Nonfarm Payrolls Data Dampens Rate Cut Expectations
Bitcoin (BTC) saw a moderate drop in value on Monday as Asian stocks also experienced losses following the release of upbeat U.S. nonfarm payrolls (NFP) data on Friday. The data, which showed the U.S. economy added 216,000 jobs in December, dented expectations for early rate cuts by the Federal Reserve.
At 4:32 UTC, Bitcoin changed hands at $43,600, marking a 0.8% drop on the day, according to CoinDesk data. Meanwhile, most Asian equity indices traded in the red, with Hong Kong’s Hang Seng trading 2% lower amid a regulatory crackdown on gaming.
The NFP data showed the U.S. economy outperforming expectations, leading to doubts that the Fed will cut the Fed funds rate as early as March. Traders now price a 60% chance of a rate cut in March, down from above 75% ahead of the payrolls report.
The rise in the 10-year Treasury yields to 4.05% since Friday also indicates traders reassessing dovish Fed expectations or the possibility of the central bank delaying a rate cut. This, coupled with the rise in wage gains at +4.1% year-over-year, has raised concerns about inflation and may prompt the Fed to maintain flexibility in its policy decisions.
Despite the potential downside risk to risk assets, there is anticipation for the approval of one or more spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission by January 10. Analysts believe that the approval has been priced in over the past three months, and the cryptocurrency could see a “sell the fact” price drop following the approval.
While Bitcoin faces challenges following the NFP data and rise in Treasury yields, the imminent launch of U.S. spot ETFs may help cushion any adverse moves in the bond market.