Bitcoin Flounders Ahead of Friday Jobs Report That Might Push Fed to Slash Rates by 50 Basis Points

As a seasoned crypto investor with a decade-long journey under my belt, I’ve seen how economic data and central bank actions can shape the digital asset market landscape. The upcoming jobs report could indeed be a game-changer for the Fed’s rate decision later this month. However, unlike previous easing cycles that seemed to propel bitcoin prices skyward, this time around, it feels like a cold wind rather than a warm breeze.

As a crypto investor, I’m eagerly awaiting tomorrow’s U.S. government release of the Nonfarm Payrolls Report for August. This crucial piece of economic data could significantly influence the Federal Reserve’s decisions during their upcoming rate-setting meeting later this month

Economists predict that approximately 160,000 jobs were added in the U.S. during August, which is an increase compared to July’s relatively low figure of 114,000. The unemployment rate is anticipated to drop slightly from 4.3% to 4.2%. If the report for August shows stronger job growth or even meets expectations, it could lead the Federal Reserve to lower its key interest rate by 0.25 percentage points. However, a weaker-than-expected job report will likely cause traders to speculate about a potential increase of 0.50 percentage points in the interest rate

This week’s economic updates – including the ISM Manufacturing PMI, the Federal Reserve’s Beige Book, and the ADP August employment report – have generally indicated softness, suggesting that the Federal Reserve could opt for a more aggressive approach to monetary policy adjustment. As per CME FedWatch, there’s now a 44% likelihood of a 0.5 percentage point interest rate reduction compared to a 34% probability just a week ago

Whither bitcoin?

In under a year, Bitcoin, previously considered a niche and low-key investment, skyrocketed to become a significant $1 trillion asset class following the Federal Reserve’s aggressive action in 2020, which involved lowering interest rates and injecting money into the economy during the Covid-19 pandemic

In this ongoing interest rate easing period, there’s been little excitement about pushing prices up. Every hint of impending rate cuts has merely paused bitcoin’s decline for a brief moment. Currently priced at around $56,300, bitcoin has dropped by 5% over the past month and is more than 23% lower than its record high of $73,500 achieved six months ago

Quinn Thompson, Chief Information Officer at Lekker Capital, commented earlier today about conventional markets, yet his words could easily apply to bitcoin: “Every economic data point this week has shown weakness,” he stated. “There’s growing belief in a 50 basis point Fed rate cut in September. However, the pain you’ve experienced over the past six months is too fresh for you to consider clicking the buy button.”