In the wake of a disappointing U.S. jobs report, Bitcoin is struggling to find its footing below the $112,000 mark, despite expectations that easier monetary policy could provide a boost. The cryptocurrency’s inability to break through this psychological barrier suggests that a deeper sell-off might be on the horizon, raising questions about its near-term trajectory.
NFP Shock: A Grim Picture for Job Seekers
August’s nonfarm payrolls report painted a bleak picture for the U.S. labor market, adding just 22,000 jobs compared to the Dow Jones’ forecast of 75,000. The report also took a knife to previous months’ data, revising June and July’s job creation figures down by 21,000, with June showing a net loss of 13,000 jobs. This paints a worrying portrait of a labor market that some, like The Kobeissi Letter, have described as “absolutely insane” and teetering on the edge of a recession.
Manufacturing, construction, wholesale trade, and professional services were among the nine sectors that shed jobs, while health services and leisure and hospitality provided a rare glimmer of hope. As a result, the probability of a Fed rate cut at the upcoming September 17 meeting has skyrocketed to 100%, with a 12% chance of a more substantial 50-basis-point cut. These developments have sent Treasury yields tumbling, fueling speculation about further rate reductions in November and December.
Bitcoin’s Double Top: A Bearish Signal?
Bitcoin’s brief rally on the back of potential Fed rate cuts saw it touch $113,300, but this was short-lived as it quickly retreated below $111,982, reinforcing a bearish double top pattern. This technical formation, characterized by two peaks at similar levels, indicates a potential reversal of the previous uptrend. Brent Donnelly of Spectra Markets highlighted that Bitcoin’s dip below the Ichimoku cloud further cements its bearish outlook.
The first significant support level lies at approximately $101,700, aligning with the 200-day simple moving average (SMA). The current double top breakdown mirrors a similar pattern from February, which led to a steep, multi-week decline, dragging Bitcoin prices down to around $75,000.
Treasury Yields: A Wild Card
Treasury yields are poised for volatility, which could exacerbate Bitcoin’s challenges. While the anticipated Fed rate cuts could initially depress the 10-year yield, providing a temporary boon for Bitcoin and other risk assets, this might be reversed quickly. Last year, despite rate cuts, the 10-year yield rose from 3.6% in mid-September to 4.80% by mid-January, defying conventional expectations.
Economic factors such as heightened inflation and persistent fiscal spending could again propel yields upward, even as the labor market’s fragility suggests a more dovish outlook. ING analysts note that while economic concerns are more pronounced now, fiscal policies and a different inflation dynamic could influence yield movements.
Inflation Watch: August CPI Data on the Horizon
As investors brace for the next wave of economic data, the upcoming U.S. consumer price index (CPI) figures for August could provide further insights into the inflation landscape. Last September, the CPI was well below 3%, but it has nudged back up to 3% since then. Wells Fargo predicts that core CPI will edge up by 0.3%, maintaining a year-over-year rate of 3.1%. Meanwhile, headline CPI is expected to increase by 0.3% month-over-month and 2.9% year-over-year.
This inflation stickiness is a crucial factor in the Fed’s decision-making process, and any surprises in the data could sway market sentiment. As it stands, Bitcoin investors face a complex interplay of economic indicators, technical signals, and macroeconomic policies that could shape the cryptocurrency’s path in the months ahead.
The Road Ahead: Navigating Uncertainty
In this landscape of uncertainty, Bitcoin’s journey seems fraught with potential pitfalls. While the prospect of Fed rate cuts initially fueled optimism, the reality of a weakening labor market and persistent inflationary pressures paint a more complicated picture. As Bitcoin hovers below $112,000, its future hinges on a delicate balance of technical trends and broader economic forces.
Investors and market watchers will closely monitor the unfolding economic narratives, from Treasury yield movements to inflation data and Fed policy decisions. The coming weeks promise to be pivotal, offering clues to whether Bitcoin can reclaim its momentum or if it’s poised for further downside. As the narrative evolves, adaptability and vigilance will be key for those navigating the volatile waters of cryptocurrency investment.
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.
