Bitcoin surged back above the $87,000 level on Friday. The sudden price spike has been driven by a surprisingly weak U.S. jobs report. The latest macro data has put a significant dent in expectations for another Federal Reserve rate hike this month.
The flagship cryptocurrency jumped from roughly $86,000 to an intraday high near $87,250, CoinGecko data shows.
The U.S. economy added just 29,000 jobs in September. For comparison, analysts were expecting as many as 90,000 new positions. Meanwhile, the unemployment rate rose to 4.2% from 4.1%, which was also unexpected.
A cooling labor market is bullish for Bitcoin, given that it makes it more challenging for the Federal Reserve to justify further monetary tightening.
A major surprise
The Bureau of Labor Statistics initially reported that the economy had added 162,000 jobs in August. However, that figure has now been revised down to 133,000.
It turns out that the U.S. economy actually lost 10,000 positions that month in September following the latest revision. Revisions for July and August erased 60,000 previously reported jobs.
This means that the U.S. economy added an average of only about 51,000 jobs per month between July and September.
Healthcare remained one of the few sources of employment growth. Construction added another 11,000 jobs. Financial-sector employment, however, declined by 7,000.
Average hourly earnings increased just 3% from a year earlier. Cooling wage growth means lower inflationary pressure.
Rate hike expectations plunge
As reported by U.Today, the central bank raised its benchmark rate by 25 basis points in September to the 3.75%-4.00% range. This was notably the first increase in three years, and monetary tightening, of course, does not bode well for cryptocurrencies.
The Fed remained laser-focused on reaching the 2% inflation target, so there was a rather high possibility of another increase. This was one of the main sources of selling pressure for Bitcoin.
As reported by U.Today, the rate hike odds started plunging rapidly earlier this week due to a surprisingly soft inflation report and New York Fed President John Williams pouring cold water on the necessity of further tightening.
The probability of an October hike is now 20% after the latest jobs report, according to the latest futures data.
Still, the Fed is expected to announce another hike in December, so this is merely a postponement.
It remains to be seen whether Bitcoin will be able to convincingly surge above the $87,000 level.
Arman Shirinyan
Dan Burgin
