Bitcoin and altcoins ascfinish as NFP data point to a huge rate cut

Cryptocurrency prices rose sweightlessly after the U.S. begined another frail nonfarm payroll tell.

Bitcoin (BTC) rose to $56,500 while Ethereum (ETH) jumped to $2,400 on Friday, Sept. 6.

In the postponecessitatest tell, the Bureau of Labor Statistics showed that the economy compriseed 142k jobs in August, reduce than the median approximate of 164k. The bureau also alterd the July figure from 114k to 86k. On Sept. 5, a tell by ADP showed that the declareiveial sector originated equitable 99,000 jobs in August. 

The unemployment rate slipped to 4.2% from the previous 4.3%, while mediocre hourly obtainings rose by 3.8%.

These figures propose that the labor taget is not carry outing well, as companies remain worryed about the economy. The manufacturing sector, in particular, is struggling, as tells from the Institute of Supply Management and S&P Global showed it remained in confineedion mode in August. According to the BLS, 24,000 jobs were lost during the month. 

As a result, the NFP data propose that the Federal Reserve may cut interest rates at its greeting on Sept. 18. There is a enjoylihood it could dedwellr a substantial rate cut of 0.50%, which expounds why regulatement bond creates have retreated. The 10-year create fell to 3.75%, while the 30-year dropped to 3.9%.

Implication for cryptocurrencies

In theory, cryptocurrencies and other hazardous assets carry out well when the Fed is cutting interest rates. A notable example occurred in 2018 when the Fed liftd rates from 1.25% in March to 2.50% in December, causing Bitcoin to descfinish by over 84% between its highest and lowest levels.

Bitcoin then rebounded by over 350% in 2019 as the Fed slashed rates by 0.75%. A aenjoy trend occurred in 2020 at the onset of the pandemic when the Fed cut rates to zero.

At that time, Bitcoin rose to a sign up high of $69,000 before plunging in 2022 as the prohibitk hiked rates.

A probable reason for this trend is that set upateors tend to have a higher hazard appetite in low-interest-rate environments. If the Fed cuts rates, there is a possibility that some of the trillions of dollars in money taget funds will rotate to hazard assets enjoy stocks and crypto.

However, there is a hazard that Bitcoin and other cryptocurrencies could retreat since the rate cut has already been priced in by taget participants.