A researcher from 21shares has provided an analysis of how the bitcoin price could react to the US jobs report. The analyst points out that the BTC price could rise if the Federal Reserve cuts interest rates. These rate cuts, which are likely tied to labor market trends, could reduce borrowing costs, potentially boosting the cryptocurrency market.
Bitcoin Price Could Benefit From Fed Rate Cut
Leena ElDeeb, research analyst at investment firm 21shares, provided insight into how the latest US jobs report could impact bitcoin prices. Following Friday’s report, which showed stronger-than-expected nonfarm payroll growth and an increase in jobs in August, ElDeeb emphasized the importance of labor market data for the cryptocurrency market in general. She stated:
Bitcoin and other crypto assets are highly sensitive to labor market data as it influences the Fed’s decision to cut interest rates, which in turn positively impacts bitcoin as borrowing costs fall.
ElDeeb also noted that recent geopolitical tensions have caused disruption in the market, but she expects a recovery. “We expect flows to start recovering after the escalation of geopolitical tensions that rocked the market over the past week,” she said.
With the Federal Reserve keeping a close eye on the labor situation, bitcoin prices are likely to react positively as interest rate cuts reduce borrowing costs. 21shares, the world’s largest issuer of cryptocurrency exchange-traded products (ETPs), continues to monitor these macroeconomic trends as they shape the movement of digital assets.
Last month, the Federal Reserve made its first interest rate cut in more than four years, cutting rates by 50 basis points. The change followed a series of rate hikes aimed at keeping inflation in check. More cuts are expected, with forecasts suggesting another 25 basis points of reduction by the end of the year, depending on economic and labor market conditions.
“The Fed is looking for a strong labor market, which the non-farm payrolls showed, rising above expectations. Furthermore, employment increased in August, indicating strength in the labor market,” the 21shares analyst explained.
Bitcoin and the longer tail of crypto assets are sensitive to labor market data as it influences the Fed’s decision to cut interest rates, which in turn has a positive impact on bitcoin as borrowing costs fall. Therefore, we expect flows to begin to recover after escalating geopolitical tensions rocked markets over the past week.
How do you think the Federal Reserve's interest rate cut will affect the bitcoin market? Let us know in the comments below.
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