Bitcoin’s Next Move Hinges on Upcoming U.S. Labor Market Data

Bitcoin’s next move could be heavily influenced by the upcoming U.S. labor market data, as macro conditions continue to shape liquidity and risk sentiment. Quantitative analyst Benjamin Cowen suggests that the unemployment rate will play a crucial role in determining Bitcoin’s price action.

Unemployment Rate: A Key Factor

Cowen predicts that if the unemployment rate stays within the 4.1%-4.2% range, Bitcoin could follow last year’s path and rally into February and March. However, a rate that is too high or too low could create uncertainty, affecting bond yields, Federal Reserve policy expectations, and ultimately, Bitcoin’s price action.

“I think decision time for Bitcoin will be next week, following the release of the labor market data. If the unemployment rate is 4.1% or 4.2%, then there is a higher probability IMO that Bitcoin will follow blueprint from last year and go higher in Feb/Mar.”

Recent Labor Market Report

The latest labor market report, released on January 10, showed the U.S. unemployment rate dipped slightly to 4.1% in December from 4.2% in November. Job growth significantly outpaced expectations, with 256,000 jobs added compared to the forecasted 153,000. A strong labor market typically reduces the urgency for the Fed’s rate cuts, which can weigh on Bitcoin, as higher rates tighten financial conditions.

Jobless Claims and the Evolving Picture

Initial unemployment claims for the week ending January 25 dropped to 207,000, below the projected 220,000. While layoffs remain historically low, hiring has slowed, signaling that the labor market might be cooling. If next week’s report confirms this trend, it could raise expectations for monetary easing—typically favorable for risk assets like Bitcoin.

Federal Reserve Policy and Treasury Yields

The Fed, following a total of 100 basis points in rate cuts since September, acknowledged that inflation remains somewhat elevated but opted to keep its benchmark interest rate at 4.25%-4.50% during its January 29 policy meeting. Treasury yields have declined, with the 10-year yield slipping to 4.526% and the 2-year yield to 4.213%, following weaker-than-expected Q4 GDP growth of 2.3%—below the 2.5% forecast.

Bitcoin’s Critical Juncture

Bitcoin, trading at $104,000 as of this writing, sits at a critical juncture. If the labor market remains stable but shows signs of cooling, it could provide the ideal backdrop for a rally, mirroring last year’s trend. However, a sharp deviation in either direction could introduce volatility.

Tips for Investors:

  • Keep an eye on the upcoming labor market data and its impact on Bitcoin’s price action.
  • Monitor the unemployment rate and its potential effects on bond yields and Federal Reserve policy expectations.
  • Consider the potential benefits of lower Treasury yields on Bitcoin’s price.

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