Bitcoin's Next Move Might be Decided by Friday's Jobs Report

A recent dovish shift in the outlook for monetary policy has played a sizable role in big gains for both crypto and traditional markets.

AccessTimeIconDec 7, 2023 at 3:57 p.m. UTC
Updated Jan 26, 2024 at 3:52 p.m. UTC
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  • Sharply falling interest rates have been a sizable factor in bitcoin's rally to above $40,000.
  • Economic news that reinforces or negates this trend is likely to have a sizable effect on the price.

The U.S. government on Friday will report on the employment situation for November and the data could add fuel to or snuff the recent advance for bitcoin (BTC).

While optimism about what is looking like imminent U.S. regulatory approval of a spot bitcoin ETF is getting most of the attention as the reason for bitcoin's move to $44,000 from $27,000 at the start of October, sharp declines in interest rates have surely played a role.

Rate hopes have sparked gains across traditional markets as well, with the S&P 500 posting an 8.9% advance in November, long-dated bonds nearly erasing what had been historically large year-to-date losses, and gold rising to an all-time high above $2,100 per ounce.

Lower interest rates are thanks to market expectations that a continued slowdown in inflation and the economy will prompt the U.S. Federal Reserve to not just pause its monetary tightening cycle, but rotate to cutting interest rates as soon as the first quarter of 2024.

While a pause certainly makes plenty of sense, to this point there's been very little evidence that the economy is slowing enough to merit such a quick shift by the central bank. For that, the Federal Reserve would likely need to see a sizable slowdown in employment gains – which are still averaging 212,000 over the past four months – or even one or two negative monthly prints.

Economists are expecting Friday's report to show a job gain of 185,000 in November, with the unemployment rate flat from October at 3.9%. A sizable miss to the downside is likely to reinforce bets about lower interest rates and might provide the fuel for bitcoin's run to $50,000. The flip side, however – jobs added of 200,000 or more – might prompt a reversal of those rate cut bets and take a chunk out of bitcoin's recent rally.

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Stephen  Alpher

Stephen Alpher is CoinDesk's managing editor for Markets. He holds BTC above CoinDesk’s disclosure threshold of $1,000.


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