In the wake of a disappointing U.S. jobs report, Bitcoin remains stuck in a holding pattern below $112,000, defying expectations of a rally fueled by the prospect of easier monetary policy. This situation unfolds against a backdrop of heightened anticipation for the Federal Reserve’s upcoming decisions, leaving investors and analysts pondering the next moves in the cryptocurrency market.
NFP Shock: A Labor Market in Distress
August’s U.S. nonfarm payrolls report delivered a jolt to the market, revealing a mere 22,000 job additions, a stark contrast to the Dow Jones’ forecast of 75,000. The report further compounded concerns with revisions that showed a net job loss in June and a meager gain in July. Nine sectors, including manufacturing and construction, saw declines, with health services and leisure and hospitality providing rare bright spots. The Kobessi Letter, a well-regarded newsletter, described the report as “absolutely insane,” hinting at a labor market teetering on the brink of recession.
Following the grim jobs data, the likelihood of a Fed rate cut at its September 17 meeting skyrocketed to 100%, with a 50-basis-point cut now on the table. This has also increased the odds of additional rate cuts in November and December, pushing Treasury yields lower as the market adjusts to the new reality. Marc Chandler of Bannockburn Global Forex anticipates that upcoming revisions to earlier jobs reports might further stoke rate cut expectations, potentially revising away up to a million jobs.
Bitcoin’s Double Top: A Bearish Signal
Despite the heightened anticipation for a Fed rate cut, Bitcoin’s price action has been anything but bullish. After a brief rally that pushed prices to over $113,300, Bitcoin quickly slipped back under $111,982, reinforcing the bearish double top pattern that emerged in late August. This pattern, a classic reversal chart formation, signifies a potential shift from an uptrend to a downtrend.
The double top pattern, characterized by two peaks at similar levels followed by a break below the neckline, signals a loss of momentum. For Bitcoin, this translates to a bearish outlook, with the first line of support around $101,700, near the 200-day simple moving average. The failure to break above resistance levels suggests a potential for deeper sell-offs, reminiscent of the February breakdown that saw prices tumble to around $75,000.
Treasury Yields and Market Volatility
The bearish technical setup for Bitcoin is compounded by potential volatility in Treasury yields, which could see fluctuations as the Fed’s rate cut decision looms. Typically, rate cuts are expected to lower yields, a development that could have bolstered Bitcoin. However, last year’s experience tells a different story, where despite initial declines, the 10-year yield rose from 3.6% in September 2024 to 4.80% by January 2025.
This counterintuitive rise was attributed to a mix of factors, including macroeconomic resilience and persistent inflation, alongside fiscal spending concerns. ING analysts suggest that while economic worries are more pronounced this year, fiscal and inflationary dynamics could still drive yields upward post-rate cut. This could potentially dampen any positive impact on Bitcoin and risk assets.
Upcoming CPI Data: A Critical Indicator
All eyes now turn to the upcoming Consumer Price Index (CPI) data for August, set to be released next week. When the Fed cut rates last September, inflation was below 3%, but has since crept back up to 3%. According to Wells Fargo, the core CPI is expected to rise by 0.3%, maintaining the year-over-year rate at 3.1%. The headline CPI is also forecast to increase by 0.3% month-over-month and 2.9% year-over-year.
This data will be crucial in shaping market expectations, as inflation remains a key variable influencing Fed policy decisions. Persistent inflation could limit the Fed’s ability to cut rates aggressively, posing additional challenges for Bitcoin bulls hoping for a tailwind from monetary easing.
A Market in Flux: What Lies Ahead
As Bitcoin grapples with technical resistance and broader economic uncertainties, the path forward remains uncertain. The cryptocurrency market is notoriously volatile, and while the prospect of Fed rate cuts could provide a boost, the interplay of factors like treasury yields, inflation data, and labor market dynamics will play significant roles in shaping Bitcoin’s trajectory.
Investors are advised to tread cautiously, keeping a close eye on macroeconomic indicators and regulatory developments. While Bitcoin’s long-term potential remains robust, the short-term outlook is clouded by a confluence of bearish signals and market volatility. As the clock ticks down to the Fed’s September meeting, Bitcoin enthusiasts are left to ponder whether the next chapter will bring respite or further challenges in the ever-evolving cryptocurrency landscape.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
