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The weaker than expected non-farm employment data in the US increased the likelihood of early Federal Reserve rate cuts, prompting Bitcoin to rise above $60,000 again. With the Fed’s decision, upward movements in the cryptocurrency market could soon begin. However, the end of market volatility is not anticipated.
Bitcoin Climbs Above $60,000
In April, the unemployment rate rose to 3.9%, which was higher than the expected steady rate of 3.8%. The unemployment rate has been below 4% since February 2022. However, this increase was balanced by a strong rise in non-farm employment of 175,000, even though it was below the expected 243,000 new jobs.
Despite the slight increase in the unemployment rate, the markets responded positively to the data announcement. Bitcoin climbed above the $60,000 level. BTC was trading at $60,928 at the time of writing. The US dollar, meanwhile, fell to around 104.6 as tracked by the DXY index.
Employment data could support a soft landing scenario for the economy and alleviate concerns of an overly rapid slowdown in the labor market. In 2024, the Fed is now expected to make two 25 basis point rate cuts.
Rate Cut Expectations Affect Cryptocurrencies
The Fed’s rate cut is a tool used to support the economy and usually lowers borrowing costs, thereby encouraging consumer spending and investments. However, this reduction can also increase risk appetite in traditional financial markets and trigger demand for alternative investment vehicles.
In this case, investors might shift from traditional assets to cryptocurrencies like Bitcoin, which could drive up Bitcoin’s price as increased demand positively affects it. However, the Fed’s rate cut should not be seen as the sole factor determining Bitcoin’s price. Overall market sentiment also plays a significant role.
