Bitcoin is currently trading below the $80,000 mark following disappointing U.S. nonfarm payrolls data. The report revealed that job growth in April was just 62,000, a significant drop from March’s figure of 172,000. This decline suggests a deteriorating labor market, which has historically fueled expectations for a shift in the Federal Reserve’s monetary policy, subsequently lifting risk assets.
However, a complicating factor is emerging. Average hourly earnings have increased to 3.8% year-on-year, up from 3.5%. This persistent wage growth indicates ongoing inflationary pressures, leaving the Federal Reserve with limited maneuverability in terms of interest rate adjustments.
For Bitcoin to reach the projected $120,000 mark, two opposing scenarios must align. A soft labor market typically signals that the Fed could hold or cut rates, which would benefit risk assets like Bitcoin by diminishing the opportunity cost of holding them. Conversely, the persistent rise in wages complicates this outlook.
The rationale behind the current macroeconomic situation is straightforward. The scale of the hiring slowdown underlines a significant cooling in the labor market, suggesting that the Fed may refrain from further tightening. Expectations have shifted towards steady interest rates being maintained through 2026. A soft payroll number could extend this timeline, essentially reclassifying market expectations as more dovish.
Lower interest rate expectations generally weaken the dollar and decrease yields on competing assets, both of which historically encourage institutional accumulation of Bitcoin. A previous instance in August 2025 illustrates this dynamic, where a modest job growth figure of 22,000 led Bitcoin to soar past $113,000 as expectations for rate cuts surged.
However, the current technical analysis of Bitcoin requires attention. Alex Kuptsikevich, chief market analyst at FxPro, notes that Bitcoin has recently retraced from its 200-day moving average. After a brief period in overbought territory, it hovers near the lower boundary of its uptrend channel, which is currently around $77,500. A significant trend reversal could occur if the price dips below $75,000.
The wage growth figure remains a critical variable in this equation. The 3.8% year-on-year growth rate presents a challenge to the otherwise favorable conditions for Bitcoin. Elevated wages contribute to service sector inflation, a vital component of the Consumer Price Index (CPI), and provide the Fed with justification to maintain higher interest rates, despite the weak payrolls data.
This persistent wage growth undermines the potential for a clean shift in Fed policy. It keeps interest rates elevated, supports the dollar, and compresses the risk premium attached to non-yielding assets like Bitcoin. With wage growth consistently above 3.5%, a conflict between the Fed’s dual mandate of maximum employment and price stability remains, which inhibits market expectations for easing.
Adding to the cautious sentiment, the Coinbase Bitcoin Premium Index has flipped into a discount this week. This index measures the price gap between Bitcoin on Coinbase and prices on offshore exchanges like Binance. A discount indicates waning institutional demand in the U.S. and coincided with the halting of Bitcoin’s rally above $80,000.
QCP Capital, a trading firm based in Singapore, highlights additional macro risks. If crude oil prices do not stabilize before the upcoming FOMC minutes on May 20, the narrative of stagflation becomes increasingly difficult to ignore. Stagflation, characterized by stagnant economic growth and high inflation, poses significant challenges for Bitcoin and its positioning as a risk asset.
