Bitcoin fell on Thursday as investors responded to new U.S. economic data and growing worries over the Federal Reserve’s policy. Traders’ interest rate expectations may have weighed on the crypto market as it was weighed against the potential for Fed rate hikes.
Bitcoin Faces Rejection From $65,000 level Amid US Jobs Data
At press time, BTC price stood at $64,384.27, down 0.69%, at press time. The BTC/USD chart reveals that Bitcoin has rallied off its lows in recent days in the vicinity of the $62,400 level. It tested the $64,800-$65,000 level, but never closed above it. Sellers came in near resistance, bringing the price back to the $64,000 support area.
The drop was due to better than anticipated U.S. employment data. Economists had predicted that initial jobless claims would be 204,000. But in reality, it was less, indicating ongoing labor market tightness. According to the U.S. Department of Labor, seasonally adjusted initial claims hit 199,000 for the week ending August 1. This was slightly higher than last week’s revised 198,000.
The four-week moving average also declined to 198,750. This was about a 4,500 decrease from the previous revised average of 203,250. The data revealed no significant changes in unemployment even as the economy shifts, continuing in a trend.
Growing Fear of Fed Rate Hike
The recent strong labor data has now added to the pressure on the Fed to cut rates. With a robust jobs market, the policymakers would have more headroom to keep the monetary policy restrictive.
Investors also are watching for Fed Chair Kevin Warsh’s remarks. There were reports that Warsh was quick to recognize that there were problems in the beginning. But he is still reportedly working on a new approach to communication at the central bank.
The market is now waiting for the September Fed meeting. CME FedWatch Tool data shows traders are betting on a 54.71% chance a 25-basis-point rate hike.
Typically, the higher rates are negative for risk assets such as Bitcoin. They make cash less available and make traditional cash yield products more sought after. This is what is driving the latest drop in Bitcoin.
Bitcoin is now holding above crucial support levels. A move below current support could trigger more selling. A recovery that brings the price back above $65,000 will help settle the bulls.
