Bitcoin hovers around $91,600 at press time, up 1.4% over the past 24 hours as investors digest the latest U.S. labor market data.
According to the latest figures from the U.S. Bureau of Labor Statistics, the economy added 50,000 jobs in December, slightly below expectations of 55,000. However, the unemployment rate fell to 4.4%, down from a revised 4.5% in November.
The dip in unemployment helped ease immediate fears of an economic slowdown, even as hiring momentum remained weak. Meanwhile, analysts say this development could influence Bitcoin and other risk assets in several ways.
Fed Rate Cut Hopes Fade Further
The lower unemployment rate has significantly reduced expectations for a near-term Federal Reserve rate cut. According to the CME FedWatch Tool, traders are now pricing in only a 5% chance of a rate cut at the Fed’s next meeting, down from roughly 22% a month ago.
In other words, markets now expect the Fed to hold interest rates steady. Seema Shah, chief strategist at Principal Asset Management, noted:
“The prospect of a January Fed rate cut has all but vanished following the unexpected drop in the unemployment rate.”
Notably, high or steady rates can make safer investments more attractive than Bitcoin, limiting crypto’s short-term upside.
What This Means for Bitcoin
Bitcoin often reacts to macroeconomic updates, particularly Fed policy and inflation expectations. With employment data showing a stronger-than-expected economy, several implications emerge:
Bitcoin may face resistance to large upward moves in the near term.
The recent stock market gains (Dow +171 points, S&P +0.2%) suggest a cautiously optimistic market. This can sometimes support crypto, though Bitcoin may lag if rates remain elevated.
Neutral sentiment on CNN’s Fear & Greed Index indicates investors are waiting for clearer catalysts before taking large positions in Bitcoin.
Inflation, Tariffs, and the Medium-Term Outlook
Research from the Federal Reserve Bank of San Francisco shows that tariffs can increase unemployment and lower inflation. This may have little immediate effect on Bitcoin, but changes in inflation or Fed policy could influence crypto markets.
If inflation spikes, Bitcoin could attract more interest as a hedge. Conversely, stable inflation and a strong job market might reduce the need for crypto as an alternative investment.
Market Sentiment Remains Cautious
Overall market sentiment is neutral, meaning investors aren’t taking big risks but aren’t pulling back either.
In a recent update, CryptoQuant CEO Ki Young Ju predicted Bitcoin would trade sideways in early 2026, with investors shifting funds to stocks and metals. He doesn’t expect a crash but sees limited growth.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
