Bitcoin fell below $80,000 as strong US jobs data increases the chances of another interest rate hike. Markets now estimate the chance of a Federal Reserve rate hike on September 16 at around 60%.
According to the recent Bitfinex Alpha report, the United States added 162,000 jobs in August, while unemployment remained at 4.1%. Data suggests the labor market remains strong, giving the Fed less reason to rush into a rate cut.
Strong Jobs Data Puts Bitcoin to the Test
The strong jobs report pushed two-year US Treasury yields above 4.34% as markets adjusted their expectations for the Fed. Higher rates may put pressure on Bitcoin as safer assets such as government bonds become more attractive.
Despite this, Bitcoin held up for a while despite the pressure. So far, it reached $82,400 on September 3 before retreating and has since traded between around $77,200 and $82,100.
Meanwhile, the cryptocurrency remains around 42% above its July low. U.S. spot Bitcoin ETFs also continued to attract demand, seeing nearly $1 billion in net inflows last week.
ETF Demand and Inflation Could Determine Where Next
Bitfinex analysts said this week’s inflation report will provide an important test for Bitcoin. They are looking at whether demand for ETFs can remain strong even if short-term interest rates remain high.
If ETF purchases continue under these conditions, Bitfinex believes that high rates may no longer be the main factor limiting Bitcoin’s recovery. A sustained flow of money into ETFs could support Bitcoin if other market conditions remain favorable.
Bitcoin also faces a potential sales hurdle as more than 71% of its supply is currently profitable. This figure is close to the historical average of 74.7%, a level that Bitcoin previously exceeded when moving from weaker to stronger markets.
For now, Bitcoin is between $77,200 and $82,100 as markets await new inflation data. A weekly close above $82,100 could strengthen the recovery, while higher inflation could increase pressure on the Fed to raise rates.
The post Bitcoin Calms Below $80,000 as Fed Hike Chances Climb: Bitfinex Alpha appeared first on CryptoPotato.
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