Bitcoin Retreats to $30.6K as Blowout ADP Report Strengthens Fed Rate Hike Bets

Bitcoin (BTC) fell to $30,600 soon before press time, with part of the pullback from the 13-month high of $31,500 happening after a blowout U.S. ADP private employment report hit the wires at 12:15 UTC, according to CoinDesk data.

The ADP report surprised markets in a big way to the upside, showing 497,000 private-sector jobs added in June, more than double the consensus forecast for 220,000. The data overshadowed a report by the Labor Department that showed modest labor market weakness, with first-time filings for jobless claims rising 248,000 last week, ahead of the forecast for 245,000.

Treasury yields extended an early rise after the ADP report, with the two-year yield jumping about 15 basis points to 5.118%, the highest since 2006, according to charting platform TradingView. The 10-year yield added 11 basis points to 4.05%, its highest level since March.

The two-year note is more sensitive to short-term interest rate expectations. Its rise to fresh multi-year highs suggests traders see the Fed extending its rate hike campaign. Indeed, fed funds futures traders now see a 94% chance of a 25 basis point rate hike this month, and markets are now factoring in a 75 chance of three additional rate hikes by the year's end. Before a pause last month, the Fed kicked off its so-called tightening cycle in March 2022 and has since raised rates by 500 basis points to the 5%-5.25% range. The tighter monetary policy has been among the factors for the swoon in crypto markets over the past 18 months.

Stock traders reacted negatively to this morning's ADP news as well, with futures tied to the S&P 500 trading 0.9% at press time and Nasdaq futures lower by 1.1%. Gold traded 0.5% lower for the day at $1,905 per ounce and the dollar index erased early losses and traded unchanged on the day at 103.24.