The U.S. economy added nearly three times as many jobs as expected in August, triggering an immediate sell-off in risky assets like bitcoin as investors reassess the chances of another Federal Reserve rate hike.
The price of the cryptocurrency had soared to over $81,000 before the news broke, but immediately fell by $2,000 to $79,200.
More specifically, the American economy added 162,000 jobs in August, according to data shared by the Bureau of Labor Statistics. General expectations were around 55,000 to 58,000 new jobs, meaning the actual numbers were significantly higher. The unemployment rate remained unchanged at 4.1%.
The July figure was also revised upwards, from a previously reported loss of 23,000 jobs to a gain of 21,000. Average hourly earnings increased by 0.3% per month and 3.1% per year.
A strong labor market gives the Federal Reserve more room to maintain tight monetary policy, which, given Kevin Warsh’s hawkish speech last week, poses problems for risk assets like bitcoin.
The explosion in employment figures weakens an argument for keeping rates unchanged: the U.S. labor market needs protection against a tightening of monetary policy. Higher interest rate expectations typically push Treasury yields and the greenback north while reducing the relative attractiveness of risk assets.
While the jobs report does not guarantee a rate hike in September, with inflation remaining the US central bank’s main concern, it certainly gives investors considerable leverage ahead of next week’s CPI data.
The article Bitcoin Price Plunges After Blowout US Jobs Report: Here’s Why appeared first on CryptoPotato.
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