Bitcoin Market Reaction to U.S. Job Data Impact and Spot ETF Prospects

Claude Pascal
01 Sep 2023
In the realm of spot bitcoin ETF aspirations, which were put on hold as the SEC delayed decisions on various new applications, crypto enthusiasts are looking to an employment slowdown and reduced interest rates for a potential positive trigger.

The U.S. witnessed an addition of 187,000 jobs in August, surpassing expectations set at 170,000 and an improvement from the revised 157,000 reported in July (revised from 187,000). However, the unemployment rate for August rose to 3.8%, diverging from the forecasted 3.5% and the previous month's 3.5%.

Immediately following the Bureau of Labor Statistics' Friday morning report, the price of bitcoin (BTC) experienced minimal change, hovering just above $26,000. Traditional markets, in contrast, displayed reactions, with U.S. stock index futures showing an upward movement, while the greenback and Treasury yields trended lower.

This week proved challenging for bitcoin, which initially surged above $28,000 on Tuesday following Grayscale's victory over the SEC in their pursuit to transform their Bitcoin Trust (GBTC) into a spot bitcoin ETF. However, the recurring pattern of swift reversals was observed, culminating in a significant drop on Thursday, with bitcoin plunging over 4% and slipping below $26,000. This shift was attributed to the SEC's postponement of decisions on multiple spot bitcoin ETF applications, including those from industry giants BlackRock and Fidelity.

In light of the extended ETF timeline, bitcoin proponents might find solace in a softening economy and the potential of lower interest rates as a potential catalyst. Despite the noteworthy aspects of this morning's report, such as the rising unemployment rate and the downward revision of July's job additions, bitcoin has yet to exhibit a positive response.

A closer look at the report's details reveals that average hourly earnings in August increased by 0.2%, falling short of predictions for 0.3% and down from July's 0.4%. On a year-over-year basis, average hourly earnings for August grew by 4.3%, slightly below the projected 4.4% and a decline from July's 4.4%.

The CME FedWatch Tool consistently indicates traders' expectation for the U.S. Federal Reserve to maintain its current stance during the September meeting. The odds of a rate hike at the early November meeting stand at approximately one in three chances.

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