Bitcoin Price Volatility Surges Following U.S. Jobs Report and Fed Rate Cut Speculation

Bitcoin (BTC) experienced significant price swings on Friday following the release of the U.S. jobs report, highlighting the cryptocurrency’s ongoing sensitivity to macroeconomic factors.

Market Reaction and Liquidations

The largest cryptocurrency by market cap initially jumped to $57,000 after the report’s release, only to quickly reverse course and tumble below $54,000, its lowest level since August 5. This volatility triggered nearly $50 million in liquidations on crypto derivatives markets in just one hour, primarily affecting long positions.

The CoinDesk 20 Index, which tracks the performance of major cryptocurrencies, was down 2.7% over the past 24 hours, with Bitcoin, Ethereum, Solana, XRP, and Cardano all posting losses between 2% and 4%.

U.S. Jobs Report and Fed Rate Cut Expectations

The U.S. economy added 142,000 jobs in August, slightly below analyst forecasts, while the unemployment rate fell to 4.2%. This data has intensified speculation about the Federal Reserve’s upcoming interest rate decision, with traders now assigning a 70% probability to a 25 basis-point cut and a 30% chance of a larger 50 basis-point cut at the September 18 meeting.

Fed Governor Christopher Waller stated that the “time has come” to lower interest rates, indicating he would advocate for “front-loading rate cuts if that is appropriate.”

Corporate Adoption on the Rise

A recent report from River Financial highlights growing corporate interest in Bitcoin. As of August 2024, businesses collectively hold 683,332 BTC, representing 3.3% of the total supply. This marks a 587% increase since 2020, with U.S. companies accounting for nearly half of these holdings.

The report forecasts continued growth in corporate Bitcoin holdings, estimating an increase of 204 to 519 BTC daily until 2026. Companies are showing a preference for holding real Bitcoin over ETFs due to regulatory considerations.

Expert Opinions and Future Outlook

Sean Farrell, digital asset research head at Fundstrat, suggested that a smaller 25 basis-point cut might be more beneficial for asset prices, as a larger cut could signal concerns about a potential recession.

Meanwhile, financial advisor Suze Orman expressed bullishness on Bitcoin, recommending that “everybody should absolutely have exposure to bitcoin.” She emphasized the potential impact of younger investors on Bitcoin’s future growth but cautioned about the risks involved.

Crypto analyst Michaël van de Poppe predicts that Bitcoin is due for some “final corrections” before potentially entering a two-year bull run. He sees $45,000 as a potential price floor and suggests that the cryptocurrency market might be “at the edge of the biggest bull cycle ever.”