Bitcoin price did not rise despite the last-minute data we announced an hour before the US market opened. Short-term price movements mean little compared to what the latest data tells us. The Fed is now completely cornered and must act.
Fed Will Cut Rates
Powell avoided a definitive statement for a rate cut in September in his remarks this week, but the available data suggests a cut is necessary. Today’s poor employment data confirms the economic slowdown and seems likely to fuel recession discussions. The possibility of a more aggressive rate cut by the Fed is emerging.
Jamie McGeever from Reuters wrote;
“Poor US employment figures confirm the economic slowdown, fueling recession discussions and the need for bolder rate cuts.
The unemployment rate is above expectations at 4.3%.
Payrolls in July are +114,000, less than expected.
June payrolls were revised downward.
Wage growth is slowing more than expected.
Markets are currently pricing in a *50 basis point* rate cut by the Fed in September.”
Why Will Bitcoin Rise?
Investors fear that Iran will escalate regional tensions by hitting Israel with ballistic missiles. However, Iran has recently done nothing for many high-ranking officials, including the president, who were killed. Its last major attack shook the markets, but they couldn’t go beyond drones. So, the panic among investors as if a ground operation is about to start is quite meaningless.
Most worried investors think the attacks will start after the US markets close. However, this even shows how much Iran avoids tension. The possibility of Iran launching a destructive operation is only possible in a fantasy world, as they are even worried about shaking the stock market. The pressure on this issue will likely weaken on Monday.
On the other hand, 114,000 employment fell significantly short of the 175,000 expectations and came in lower than June’s 179,000 (the initially reported figure of 206,000 was revised down). Powell said in his speech this week, “We are in a good place in employment; we don’t want more easing; we will act if necessary.”
The Fed now needs to act. With inflation falling to 3%, it is essential for the Fed not to forget its second most important duty, employment, alongside price stability. Therefore, cryptocurrencies should see new peaks in August.
