Bitcoin price dives 2% on US jobs data as Fed rate hike bets heat up
Bitcoin experienced a brief dip in price, dropping to $27,000, following the release of unexpected non-farm payroll numbers. However, the BTC price managed to stage a strong recovery after this initial drop. The non-farm payroll numbers are a key economic indicator in the United States, and unexpected developments in this data can influence financial markets, including cryptocurrencies like Bitcoin.
David Becker 
Bitcoin, with the ticker BTC, experienced a sudden price drop to $27,000 during the Wall Street open on October 6. This drop was triggered by unexpected United States employment data, which created uncertainty in the markets.
The non-farm payrolls (NFP) data for September showed a significant increase, with 336,000 jobs added, nearly double the expected number of 170,000. This unexpected data indicates the ongoing resilience of the labor market in the face of the Federal Reserve's measures to counter inflation through interest rate hikes. However, the implications of this data were viewed as negative for risk assets, including cryptocurrencies like Bitcoin.
Many market participants saw the strong jobs data as a potential catalyst for the Federal Reserve to implement another interest rate hike at the November meeting of the Federal Open Market Committee. This perception was reflected in the futures market, with the probability of a rate hike increasing from 25% to 31.3% according to CME Group's FedWatch Tool. The upcoming release of the Consumer Price Index (CPI) was expected to provide further clarity on inflation and Fed policy.
The Kobeissi Letter noted that both the markets and the Fed were now under pressure due to the unexpected data, as it could affect the timeline for rate adjustments. Market futures experienced a significant drop following the report, signaling that the Fed's expectations may not align with the market's reaction.
Regarding Bitcoin's specific response to the employment data, it was observed that spot and derivatives traders exited positions in reaction to the NFP print. Open interest in Bitcoin decreased, which had previously been associated with price volatility. The decline in open interest brought it back to more typical and "healthy" levels.
Bitcoin's price and the broader financial markets continue to react to economic data and central bank policies, reflecting the interconnectedness of traditional financial markets and cryptocurrencies. Traders are closely monitoring these developments for potential trading opportunities and assessing their impact on the overall market sentiment.
