In January, payrolls rose by 130,000, reinforcing expectations that the Federal Reserve will maintain current policy rates in the near term. This job growth has led futures markets to adjust anticipated rate cuts to the latter half of the year, tightening financial conditions even amid signs of easing price pressures.
As part of this market adjustment, Bitcoin has been consolidating following a repricing. Analysts observe that high yields are dampening risk appetite, even as sell-side pressures show some signs of alleviating. Investors are keenly awaiting the release of January’s delayed inflation data, especially after a robust labor report indicated the economy added 130,000 jobs last month. The upcoming U.S. consumer price index data, which was postponed due to the government’s partial shutdown, is now projected to show a decline from the previous month—specifically, a 0.2% drop from December, bringing the year-over-year figure down to 2.5%.
Derek Lim, head of research at crypto market-making firm Caladan, underscored the importance of the inflation metrics, stating they are “more important than employment data.” A lower-than-expected inflation figure could pressure the Fed to expedite rate cuts, which would be favorable for risk assets. Typically, lower Fed policy rates ease financial conditions, leading to lower discount rates and promoting risk-taking behavior that historically benefits equities and, during periods of ample liquidity, cryptocurrencies.
Conversely, if the inflation figures come in hotter than expected, it could reinforce a “higher-for-longer” rate environment, applying pressure to risk assets, experts warned. Following the unexpected nonfarm payrolls data, analysts have concluded that the Federal Reserve is unlikely to pursue economic stimulus anytime soon. The CME’s FedWatch tool indicates a 94.6% likelihood that the Federal Reserve will keep rates unchanged at 3.50%-3.75%, shaping market expectations and contributing to a correction in cryptocurrencies and other risk assets.
Tim Sun, a senior researcher at HashKey Group, described this job growth as “good news” for the economy but “bad news” for the market under current conditions. Following the jobs data release, rate futures were quickly adjusted, with expectations for rate cuts being pushed into the second half of the year. “Strong employment suggests economic resilience remains, meaning the Fed has no urgent reason for early easing,” Sun stated. He elaborated that with Treasury yields remaining elevated, financing costs and discount rates are unlikely to decrease, which places ongoing pressure on high-risk assets like Bitcoin.
Despite the prevailing market fragility, some analysts suggest that sell-side pressure might be close to exhausting. Sun noted, “From the perspective of price action and on-chain distribution, the pace of the decline is indeed decelerating, yet we have not seen a signal for a definitive trend reversal.”
As of the latest updates, Bitcoin’s value has dipped by 0.5% over the past 24 hours to $67,200, while Ethereum remains steady at $1,970. Bitcoin has been consolidating within a range of $62,822 to $72,000 over the past week, with volatility remaining relatively subdued following recent sell-offs in late January and early February.
