As a seasoned crypto investor with over a decade of market experience under my belt, I can’t help but see the recent job report as a double-edged sword for the Bitcoin market. On one hand, the addition of 227,000 jobs is certainly positive news for the economy and signals a robust labor market. However, the accompanying rise in unemployment rates has created an environment that could potentially push the Federal Reserve to lower interest rates, as predicted by analysts like Zach Pandl from Grayscale Investments.
The number of non-agricultural jobs added in November surpassed predictions. Yet, this increase in employment was coupled with a rise in unemployment levels. This unexpected job market trend might prompt the Federal Reserve to reduce interest rates towards the end of this month.
According to analysts, the likely interest rate cuts may spur investor appetite for Bitcoin (BTC).
227,000 new employment positions were created in November, surpassing the estimated 220,000, while unemployment rate increased slightly to 4.2%. In a communication with CryptoMoon, Zach Pandl, the head of research at Grayscale Investments, expressed:
“Today’s jobs report likely solidifies the case for another Fed rate cut at its upcoming meeting. All else equal, lower official interest rates tend to weigh on the value of the Dollar and benefit other currencies including Bitcoin.”
“Despite the retreat from above $100k yesterday, Grayscale Research thinks the crypto rally can extend into the New Year,“ Pandl continued.
Other analysts agreed with the Grayscale researcher’s forecast, suggesting that the data might prompt the Federal Reserve to lower interest rates.
All eyes on the Federal Reserve
According to the CME FedWatch prediction tool, there was approximately a 3 out of 4 likelihood that the Federal Reserve would decrease interest rates by 0.25%, as per their meeting on December 17-18.
After remarks by Federal Reserve Governor Christopher Waller suggesting his approval of a potential interest rate decrease in December, the likelihood of such a cut increased significantly.
“I believe that monetary policy is still restrictive,” Waller said.
The Fed Governor further stated that he anticipates interest rate reductions will persist throughout the coming year, gradually bringing us closer to a point where our policy rate is neither stimulating nor constricting economic growth.
In November, the cost of Bitcoin dropped by close to 3% following remarks made by Federal Reserve Chairman Jerome Powell, who stated, “The economy isn’t indicating an urgent need for us to reduce interest rates.
Jamie Coutts, a top cryptocurrency expert at Real Vision, recently forecasted an estimated rise in the M2 Money Supply – which gauges the current amount of money circulating – to around $20 trillion by the year 2025, according to the Federal Reserve’s plans.
The analyst indicated that a rise in liquidity could potentially draw around $2 trillion into the Bitcoin market, and they referenced past data suggesting that Bitcoin typically takes in about 10% of any expanded money supply (M2) as it becomes available.
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2024-12-06 22:32