Recent developments in the U.S. labor market could set the stage for a significant rally in Bitcoin (BTC) as investors brace for potential Federal Reserve rate cuts. Bitcoin’s price experienced a sharp decline, dipping below $111,000, paralleling a bearish trend in the U.S. stock market following the Bureau of Labor Statistics’ (BLS) unprecedented revision to the payroll data, which saw a staggering 911,000 jobs cut—marking the most considerable reduction in history.
The latest BLS data revealed that 880,000 jobs were slashed from the private sector, with an additional 31,000 from government positions during a benchmark revision for March 2025. Unemployment rose to 4.3%, and the labor market added a mere 22,000 jobs in August, far below the anticipated 75,000. Core Personal Consumption Expenditures (PCE) inflation remained steady at 2.9%, amplifying concerns about a potential recession unless the Federal Reserve opts for more accommodative monetary policies.
Traders in the bond market are betting heavily on a 25 basis point rate cut from the Federal Reserve at its upcoming September meeting, with probabilities climbing toward 92% as of late Tuesday. Additional rate cuts may follow, potentially reaching two by the end of 2025, according to data from the Chicago Mercantile Exchange (CME).
Market analysts note that historical trends suggest that asset owners, including Bitcoin holders, are likely to benefit from such financial maneuvers. The Kobeissi Letter highlighted that the Fed will likely reduce rates even amid substantial inflation, given the labor market’s current fragility. Drawing on history, they pointed to the 1990-1991 recession when the Federal Reserve reduced rates dramatically despite rising unemployment rates. Following initial declines, the stock market rebounded sharply as cheaper credit conditions stimulated growth.
Gold has also been on an upswing, increasing by 40% in the months leading up to the BLS job revision, as traders anticipated weaker job numbers. In parallel, Bitcoin has gained approximately 20.30% so far in 2025, suggesting a possible correlation with gold’s performance if past trends persist.
Technically speaking, Bitcoin appears positioned to breach its previous all-time high of $124,500. After bouncing back from the lower trendline of a rising wedge formation, there are indications that bullish momentum is returning, with a target near the 1.618 Fibonacci extension at $129,000, representing a potential gain of 12% to 15%.
Additionally, Bitcoin is trading above its 20-week exponential moving average (EMA) around $108,500, which reinforces a bullish outlook and indicates strong support beneath current levels. A decisive breakout above the resistance zone of $115,000 to $116,000 could pave the way for buyers to propel Bitcoin to new all-time highs, marking the next phase of its bullish cycle.
As the market evolves, investors are urged to exercise caution and conduct thorough research, as all investment and trading activities carry inherent risks.
