Bitcoin experienced a decline to $67,500 on Wednesday, falling by 2% within a 24-hour period. This drop followed the release of a stronger-than-expected U.S. jobs report, which diminished the anticipation of a Federal Reserve interest rate cut in March.
According to the U.S. Department of Labor, the economy added 130,000 jobs in January, nearly doubling the economists” prediction of 70,000. The unemployment rate decreased to 4.3%, slightly better than the forecasted 4.4%. This data reflects a robust labor market, which lessens the urgency for the Fed to lower borrowing costs.
In the aftermath of the job report, Ethereum saw a sharper decline, falling 3% to $1,950, while Solana dropped 3.4% to $80. Last week, Bitcoin had plummeted to a low of $62,800 before partially recovering to $71,500 on Sunday, marking its lowest price in 14 months. However, this temporary rebound was short-lived once the employment figures were released.
Earlier this month, Fed Chair Jerome Powell indicated that the central bank would adopt a data-dependent strategy regarding future adjustments to its benchmark rate, currently set between 3.50% and 3.75%. The latest employment data provides little justification for a rate cut in the near future.
On the same day, traders assessed only an 8% probability of a rate cut by a quarter percentage point in March, according to CME FedWatch. This figure represents a significant decline from 27% just a month prior. There is an evident shift in trader sentiment, with many now doubting a March cut altogether.
Jasper De Maere, a strategist at crypto market maker Wintermute, observed that bond market expectations have remained consistent despite the changes in Fed rate probabilities. This disconnect suggests that investors may be increasingly focused on company valuations, particularly in the AI sector, rather than solely responding to monetary policy changes.
Typically, lower interest rates favor risk assets, as they prompt investors to seek higher returns outside of cash and safer holdings. However, cryptocurrencies have struggled despite major stock indices reaching record highs. Following the job report, the S&P 500 and tech-heavy Nasdaq initially rose but later retreated alongside Bitcoin.
In contrast, gold prices increased by 1.3%, reaching approximately $5,100 per ounce. This divergence highlights Bitcoin”s current positioning in relation to other assets regarded as stores of value or hedges against economic uncertainty.
Chris Beauchamp, chief market analyst at the trading platform IG, noted a lack of interest in dip-buying within the cryptocurrency market. With advancements in AI and gold continuing to attract attention, Bitcoin”s appeal appears to be waning for the time being.
