In July, the U.S. added 114,000 jobs, but the unemployment rate went up to 4.3%. This increase in unemployment has led to speculation that the Federal Reserve might lower interest rates soon. If the Fed cuts rates in September, it could help boost Bitcoin’s price, which is expected to be between $61,000 and $70,000 in August.
The rise in job mismatches and more people joining the workforce are contributing to higher unemployment. These issues add to economic uncertainty, which could affect market conditions and investment decisions.
U.S. Jobs Report Fuels Rate Cut and Bitcoin Speculation
The latest U.S. jobs report has stirred up discussions as employers added 114,000 jobs in July, but the unemployment rate surged to 4.3%. This increase has led to speculation that the Federal Reserve might consider cutting interest rates at their next meeting, which could potentially boost Bitcoin’s price.
Jag Kooner, Head of Derivatives at Bitfinex, noted that while the job numbers indicate some economic strength, there are ongoing fears of a recession due to high lending rates and rising unemployment. The 4.3% unemployment rate might trigger the Sahm Rule, a recession indicator. However, Kooner mentioned that this rule may not be as reliable post-pandemic because of the unique conditions in the labor market.
Additional factors contributing to the unemployment issue include increased labor force participation, especially among immigrants, and a mismatch between job seekers and available jobs. The inverted yield curve, another recession signal, adds to the economic uncertainty. Despite a rise in layoffs, they remain low historically.
The Federal Reserve has maintained high interest rates to combat persistent inflation, but with softening economic signs, there is growing speculation about a possible rate cut. If the unemployment numbers suggest that inflation is under control, a rate cut in September might be on the horizon.
Market Outlook: Bitcoin’s Bullish Prospects and Fed Rate Cut Speculation
The recent U.S. jobs report has set the stage for potential bullish news for Bitcoin. A possible Federal Reserve rate cut in September is seen as favorable for Bitcoin, which could strengthen its bullish outlook.
For August, the market may experience low liquidity due to the summer season. Altcoins are showing significant buy walls at lower price ranges, with Bitcoin expected to trade between $61,000 and $70,000. This price range could be an ideal zone for accumulation.
Jag Kooner, Head of Derivatives at Bitfinex, believes that a rate cut will boost market confidence and increase liquidity, leading to more ETF inflows as investors seek opportunities in a favorable environment for risk assets.
Currently, market confidence remains high despite potentially negative news like the Mt. Gox distribution, German government sales, and recent significant on-chain movements. These events have not significantly impacted Bitcoin’s price.
Jag emphasizes that remarks from Fed Chair Jerome Powell regarding inflation and economic growth will be crucial. If Powell comments on persistent inflation or slow economic growth, it could alter expectations for future rate decisions.
Powell has suggested that a rate cut could be considered for the September meeting, and financial markets are now almost certain of a rate cut. However, the Fed will base its decision on data, particularly inflation trends, seeking evidence that inflation is moving back towards their 2% target before making any cuts.
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